The first thing to know about money investing is that it is much simpler to achieve than you think, as long as it is done with discipline using the right methodologies. There are a lot of people out there that make it sound like it is all a very complicated process, but don’t be fooled by their language and sophisticated vocabulary, they actually describe very simple tasks about financial matters in real life.
The first rule of successful investing is to know how to measure financial results, mostly understanding the performance of financial assets and how they compare with each others. You only need to know simple math (addition, multiplication, subtraction, division) to understand 99% of financial calculations needed for investing money wisely. It’s a lot like buying grocery at the store and comparing prices before buying any items, and knowing how much you want or can spend overall.
The second rule of successful investing is to take nothing for granted, and to learn about the basics of financial assets you want to buy. If you don’t understand a certain type of financial assets, try to learn more about them until you fully understand their level of risks. If a certain type of financial assets still do not make sense, simply don’t put your money into them. It’s really that simple, and you will have no regret.
Some Key Take Aways
- Investing is about making your money work for you
- Reinvesting your money allows you to take advantage of compounding
- Each investor is different in his or her objectives and risk tolerance
- There isn’t just one strategy that can be used to invest successfully
- Each investment vehicle has its own unique characteristics
- Diversifying investments in a portfolio helps to manage risk and boost performance