Want to start investing? Remember the 5 rules of investing.
Updated: May 19, 2022
“If you don’t find a way to make money while you sleep, you will work until you die.” -Warren Buffet
In simple words, if you don’t invest your money, you will suffer. For most of us non-finance people, investments are overwhelming especially because we are afraid of risk. You can change that by following these simple rules of investments:
When it comes to money, whether you are spending or investing, the first step is always conducting research. If you want to buy a new phone you go to the market or you go online to check what options suit your price range. Similarly, for investments, you need to research what options are available to you and how they work. Never ever invest in anything you don’t understand!
2. Play the long game
Invest for a long period of time (at least over 2 years). It is important to not panic when you hear about the market going down. Also, avoid checking your investments account every day.
3. Don’t put all your eggs in one basket
This is the Golden rule. When it comes to investments, never invest in only one option! Invest a small amount in multiple options. This is called diversifying. This way, even if one option results in a loss, you don’t end up losing all your savings.
4. Make investing a monthly habit
Put aside money every month for investments. 15- 20 % of your monthly income should be saved in an investment option. Money for short term goals (for example travel) can go in an investment that you can easily withdraw from for example savings account or mutual funds.
5. Start early
The younger you start investing, the sooner you can retire and relax. Even if you start with a small amount, it will grow into a large sum over time, and point number 2 - 'Playing a long game' will show its magic. Let your money work for you.
If you are interested in learning more about how to invest your money, contact us!