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I hope this post will offer my readers valuable advice when they invest either in the stock exchange, forex or even in online investment programs like HYIPs.
Investment runs in parallel with the study of philosophy. The study of philosophy is so critical that even modern physicists have to link spirituality with science. Electron being the most fundamental subatomic particle can tunnel through a barrier. Why cant human tunnel through any walls? Based on Heisenberg uncertainty principle, the exact velocity and position of the actual electron cannot be simultaneously calculated. If we know one variable, theres no way we can know the other.
All these weird phenomenon boils down to philosophy. Confucius, an esteemed Chinese social philosopher, tells us to be humble. Friedrich von Schiller, a German philosopher, tells us to take calculated risks.
Here are some of the advice I have for fellow investors.
1. Be Humble
Our mind is a weird creation. We cant control it. My Yoga teacher told me our mind is everywhere.
Our brains are built in a way that we think the future will be built like the past. If we continue what we are doing now, we will attain the same success. This is very wrong.
In the world of investing, everything is volatile. The industry is so dynamic that no one can see what lies ahead. Please do not think that yesterday success will continue the next day. Always ask yourself what if your decision is wrong.
2. Diversification
Miguel de Cervantes Saavedra (1547-1616) says: It is the part of a wise man to keep himself today for tomorrow, and not venture all his eggs in one basket.
Never invest all your money in one basket. Spread your money into different portfolios. At least when one fails, you can depend on the other for success.
3. Risks
A successful businessman told me he does not take risk when it comes to business. To take risk, you will be doomed. However, he takes calculated risks. Calculated is the keyword. If you dont take risks, you gain nothing. If you take risks unnecessary, you lose everything. Take calculated risks to see your earnings.
The rule applies, the more risk you take the higher the returns. Remember to research and read up more before you commit your investments.
4. Safe Funds
Please do not invest more than you can afford to lose. Always think of what will happen if you lose all the money you have invested. Are you still able to feed yourself? Allocate a portion of money you think you can afford to lose in your investment.
Make sure you still have a roof over your head, bread on your table, a comfortable life for your kids at the end of the day.
5. Patience
Many investors are so impatient that they jump onto the bandwagon when an opportunity comes. Do proper research before investing. You still have a long life, opportunities will always come to you.
6. Dont Time The Market
Peter Lynch, a Wall Street stock investor, puts it aptly. He says The real key to making money in stocks is not to get scared out of them.
When it comes to downturn, most people reaction is to sell. Then buy when the market picks up. You lose most of the gains by the time you realise it is time to buy again. Always stick to what you have invested so that you can yield the highest return.
7. Biting the Bullet Out
Always plan in advance how much loss are you willing to take. For example set the maximum loss you can afford to say $5000. Quickly bite the bullet out when you have lost $5000 and wait for the next opportunity to earn your money back.
8. Do Not Be Greedy
Similarly to point 7, always project how much your investments will bring you before it collapse. You might want to set the ROI to 10% and quickly exit when you hit this target. Do not flip the money section in your local newspaper for more news on this stock. It will only itch your heart. Be contented with what you have gained.
9. Buying Low
This has come from the mouth of one of the most successful investor Warren Buffett. He was of the belief that as long as the market undervalued the companies relative to their intrinsic value he was making a solid investment. He reasoned that the market will eventually realize it has undervalued the company and will correct its course regardless of what type of business the company was in.
10. Head or Heart
Should you play your cards by listening to your head or heart? If you are talking about love relationships, then it is your heart. But investment wise, play according to what your head says. Do proper research and analysis.
Nonetheless, being richer does not necessary make you a more happy person. Please always remember your family and friends. Do not neglect them in the pursuit of greater wealth.
I wish all my readers success in their investments.