Be aware of Axioms for Investing

Use 10% of the revenue for investing

This is much more difficult then someone may think. The rule includes preparing personal business plan. It is necessary to make structure of the budget, save not less than 10 % of the revenue directed to the investments by getting the strict decision not to spend for anything else. Why 10% – this is the amount which will not have the impact on your needs.

Don’t invest with the borrowed money

Don’t forget that for investing you should use the financial resources that you can spend without difficulties. It is not good idea to invest your last resources. Same is with the money that you’ve borrowed from someone else. Taking all the risks into the consideration, investing with the borrowed money can be non-ethical as well, regarding the threats of worsening relationship with the people that trust you. High level professionals may afford to manage someone else’s finances but this is quite different relationship.

Make diversification

Define the risks, instruments, market sectors. This is the rule N1. For the beginners that’s not a big problem but when you are an experienced professional, sometimes you may face the temptation of putting all the finances in the assets that may be risky and don’t have the potential of getting revenue. The skill that makes investor different from others is the skill to see the opportunities that are invisible for the rest society.

 Don’t follow the crowds

Don’t go towards the direction where other investors are intending to go. He is probably already late. Your choice is to be always one step ahead, and see what is after two milles. You have to take a look on the crowd but not to stand in the same position. By swimming against the feed, buying non-evaluated assets and selling them at the time of boom you will achieve to receive especially high revenue.

Investor – he isn’t a player, don’t let the excitement to take control on you

In spite of the non clear situation on the market, its still risky to consider investments as the hazardous game. Maybe this isn’t the problem for traders as they are gamers with their character, but even for them its so crucial to keep control on themselves. Investor must be rational in his decisions to minimize the risks. Every failure should be tactical and he must always try to direct his work to the purpose of increasing capital.

Forget fairy tales and magic news

Be sure that the professionalism and success never comes without an effort. Attending specific seminars is never enough to make you investor. Together with the knowledge you should concentrate on the action which is even more important than your intellect. The ones who are waiting for the magic to happen can forget investing forever.

 

Provided by Business Psychology – B2P.GE