My 4 guidelines to investing

By Dr Daleen Smal | Passive Income

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Oct 21

Investing is about finding a balance.

Do you never again want to have back those endless, sleepless nights of tormented tossing where you are constantly worrying about how your salary is going to help you meet your debts?

I’m sure you don’t, SO, when you do invest your money, you want to make sure you can still sleep well at night; you don’t want just a new set of worries!

If a specific investment is going to give you sleepless nights, do not invest in it. It means the risk profile of that investment is more than what you can or should handle.

What stage of life are you at right now? What kind of solutions do you need? How much can you afford to risk?

The options are different but they are out there!

Everybody is at a different stage in their life’s journey; this influences your decision about where you invest and how you invest.

Everybody has to start from where he/she is right now.

If you are, for instance, in your mid-forties and looking ahead to securing your retirement you will think quite differently to a twenty-something who is newly launched into a career and has a very long-term view.

In general, older people and people with dependents are more risk averse than younger people and people without dependents.

We all have different risk profiles and you have to determine yours.

Your choices of where you sow your seed, and what kind of harvest you wish to reap, and how quickly you wish to reap it, are all determined by your own unique circumstances and goals for your life.

Talk to responsible and trustworthy professionals in your country to help you with this.

There are a lot of opportunities out there and there are many honest and rock-solid advisors. However, there are a lot of smooth-talking opportunists too.

The advice I offer you will help you to keep an eye out for unscrupulous sharks and be wary of any seemingly amazing ‘get-rich-quick’ story they are selling!

When it sounds too good to be true, run.

Don’t waste your money on dodgy Ponzi schemes.

These are 4 of the few easy guidelines which I have learned over the years:

1.

Investing your hard-earned cash is not something you rush into headlong!

Be sure that you understand exactly what you are investing in, what the risks are and how you are going to protect your money.

Peter Lynch said: “Know what you own, and know why you own it.”

2.

Look to invest in assets you will be happy to hold on to for a long, long time, like Warren Buffett, who is the ultimate long-term investor.

You have to buy wisely and invest only in quality assets.

Quality assets will increase your net worth, provided you got rid of your liabilities.

There is no point in assets and liabilities remaining equal but only at a higher level. If assets minus liabilities remain negative or zero you are losing the wealth game. If you have $10 million worth of assets and $10 million worth of liabilities, it still means you are broke.

Remember, investing is not gambling.

George Soros said “If investing is entertaining, if you are having fun, you are probably not making any money. Good investing is boring.”

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3.

You have to monitor the performance of your investment and consult with experts about their performance.

Most important, don’t be sentimental; don’t get attached to your investments. Sell them immediately if they don’t perform as expected. They are not your children. They are simply vehicles through which you build your wealth. They are your “employees” and you should let all non-performing “employees” go.

Remember Rule #1 – never lose money. Can you remember Rule #2? Never forget Rule #1.

4.

Discipline and consistency are two keys in the active management of your passive investments.

You don’t want to be an “Absent Boss” when your money and wealth is at stake.

Your money may be working for you, but it is still your responsibility to manage it and see to it that every dollar is going where you want it to go and doing exactly what you want it to do.

 

In the end, if you don’t feel comfortable with an investment or if you don’t understand it completely, do not do it. Do not make an investment if you can’t afford to lose all the money you put in. Investing is not gambling.

On the other hand, do not be afraid to do your research. Don’t be afraid to ask people who are experts in their fields. Do not hold back because you don’t know the risks – make it your goal to understand the risks. Become passionate about investments – there is so much to gain!

Wherever you are on your wealth journey, we're here for you.

Get the tips, strategy and actionable advice you're searching for delivered straight to your inbox.

🔒 We will not spam, rent, or sell your information. Powered by ConvertKit

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