Investment philosophy and strategy

As we earn more and spend less, we can earn a profit and able to save money. A normal person will spend all the money he earns and goes ahead by taking on debt. But, only a few people who are the smart money managers who will put their profit on to something which will yield more money in the future. We have to develop our skills on how to earn money by learning. We should use money as a tool to improve our lives. We should always think about our future plans for retirement and independence financially. We should also think whether is it a safe way to invest money.

Let us take a look at what are the things we should do when we start investing.

 

  1. Start as early as possible:

The amount of capital we invest does not matter, how early we invest matters a lot. We should make our passion and goals more difficult to achieve so that we will try to give our best to reach those goals. The traders should give enough time and wait, then even the small returns will generate a real wealth.

 

  1. Think long term:

The traders should think about the long-term investment as the market will jump 20% one year and fall 20% the next year and again will rise in the next year. So, it is better to think about the inflation factor.

 

  1. Spread the risk:

We should not put all our wealth as the market will see many ups and downs. The best way to smooth the market’s ups and downs is through diversification. We should get more than one stock and also other types of investments. We can decrease the risk factor by spreading our wealth around all the types of investment.

 

  1. Keep low cost:

When the cost is too high, it is difficult to get back the profit. So, it is better to keep the costs low always to get a better profit and wealth.

 

  1. Keep it simple:

Many people think investment as so too complicated. We cannot guess which stock will perform well in the market. So, it is better to keep simple investing strategy.

 

  1. Make it automatic:

It is an important strategy that we should automate good behavior so that we will not come to a situation to blame ourselves. If we have any retirement plan, it is good to ask the HR about to max out our contribution by payroll deduction.

 

  1. Ignore everyone:

We should make a decision by ourselves and we should not depend on the decision of others. The decision should be based on our financial status, not on the market changes.

 

  1. Conduct an annual review:

It is the smartest way to look after the profits and losses we made out in a whole year. This will make us more strength to face the losses and more enthusiastic to reach the goals and achieve the maximum profits.