With regards to investing, there is an uncountable amount of information and diverse opinions which can be found here and there free of charge. A lot of individuals actually understand the movement of the economy, markets, and the class of assets or sector with the best potential as well as the particular securities that will be outstanding. In most cases, nearly all these opinion are backed with relevant reasoning and informational evidence once in a while.
Indeed, you can never be a good investor for a long period of time unless you abide by many intelligent investment rules. Meanwhile, it is far easier to disuse the rules when compared with forecasts and opinions. Also, to keep abiding by the rules can be hard, especially when they are likely to conflict with your forecast and opinions.
Undoubtedly, these are three things every investor should know. They are as follows:
– Don’t ever invest unless you have clearly expressed and analyze your long term strategy with the application of a predetermined set of rules for investing. Be reminded that every goal oriented thing in life has its mechanisms/rules and investing is not an exception.
– Do not be disobedient to the rules.
– Always be observant of the rules. Any attempt to ignore them makes them out of date. You may rather replace them with updated rules but do not discard them.
Unfortunately, a lot of people do not go into long term investment, even when they do not have any long term rules. Some of the reasons for these may include the following:
– It obviously demands considerable time and effort to draw up rules and strategy. Only a few individuals are concerned about setting strategies. The majority of people neither understand nor have the technical capability to do so, hence they are missing out on the benefit and invest blindly.
– They have become accustomed to fast changes in their career and life. As a result, they place little value in long term commitment.
– Instant opportunities are attached with more importance above long term strategic decision. This is due to lack of wisdom to differentiate between urgent and important matters.
– Need to take charge and be in control of your destiny. Here, opportunity is superior to prudence.
In the nutshell, you may take a closer look of the following:
– Go for the most recent trend
– Dispose those assets which show poor recent past performance; and purchase assets which show impressive recent appreciation. You must state the exact period to be measured by recent past performances.
– The recent past performance is usually evaluated by the return over the past 12 months.
– Let each position be held for at least 3 months.
– Start the implementation of decisions following 3 months of confirming past performance.
When all the rules are well fulfilled, then you will be able to make good money out of them, all without burning your fingers.