These investment principles can go a long way in making your money work for you. If you pay attention to them as you make investment decisions you’ll be more likely to achieve your goals.
1. Do your research
Before investing, you should have done thorough research to have some knowledge of what you’re investing in. Know where your money is going and what you’ll get in return. Invest in only what you understand.
2. Don’t take unnecessary risks
How much can you afford to lose? Use this question to guide and review your investment decisions. Investors with more time can recoup from losses but if you’re nearing retirement, you should adjust your risk tolerance.
3. Leverage the power of compound interest
Compound interest and time work together to increase the earning potential of your investments. If you start early, you take advantage of the effects of compounding interest on your investments over a long period.
When you diversify, you reduce your dependency on the performance of any single investment. Diversifying can increase your returns while mitigating risk. Build a balanced portfolio of debt/equity instruments and rebalance your portfolio regularly to help you stay on track toward meeting your financial goals.
5. Invest for the long-term
Investing is a marathon, not a sprint and it takes time to give good returns. Focus on the long-term to avoid falling into get-rich-quick schemes. Remember, It is the time in the market rather than timing the market that counts.