Golden Rules to Become a Great Investor

Article by Sherin Dev; Follow me on Twitter

Investment world is vast and difficult to get right advices whenever an investor required. There are great investors like Warren Buffett, Philip Fisher and Benjamin Graham, but it is very difficult to rely on any information that claims these gurus have highly practiced. It may or may not happen, but solid evidences are less to believe it into total. If such situations, beginner investors required digging more to get right investment ideas and combine it to create their own intellectual framework to invest on stock market. Below you can find the most trusted investment advice each investor should know and practice to get great investment success in their career. It is not limited but, known as the most common and practices by all the great investors in the world. To understand these ideas, nothing required, but only commonsense.

1. Start investing early

Early investment ensures the capital growth to the maximum. It also help investors to protect himself by giving enough time in front of them to earn money in case of loses of total money. Solid reason any intelligent financial planners advice their clients to not invest big chunk of their retirement money to the stocks. Once if loses happens, a person near to the retirement gets very less time to make money again for the retirement purposes. As an investor, everyone should remember this evergreen rule, start investing early.

2. Invest for long term

There are no solid evidence available to know how long term investments turn an investor wealthy. But, it is understandable with common sense that, stock market trading is just like a gambling and long term investing with good company enable investors to take maximum advantages from the growth of the companies. High dividends, bonus shares, stock splits, all help investors money to grow to new heights if intelligently invest on good companies with long term perspective. Invest for long term thus consider as the golden rule for any type of investors.

3. Diversify your investments

Diversification plays major roles as it is the best and effective method to reduce investment risk. When diversifying, an investors spanning his money to multiple companies, sectors and businesses. Even if diversified, some situations like economic recessions would bring the company businesses down, but would not sustain forever. Situations like economic recessions, slowdown and market volatilities would happen time to time as it is the common factors to any economy and stock markets. An intelligent investor always aware of these natures and would invest properly allocating the fund to the right companies and sectors!

4. Best investment can be done by you

Yes that is the truth. You may find lots of stock recommendations everywhere, but ultimately your own pick would win over all of them. This is a little known truth to the investor community, but yes, the real fact. This is happening by putting enough care on the selection of stocks with your own money.

5. Beware of tipsters, analysts, brokers and self acting gurus

Take care on each of them. Never rely on hot stock pick news’s, stock tips, analyst reports or any such rumors that may recommend anything to investors to buy. Instead, buy stocks only after your own rigorous study and research on the authenticity. This is an investment truth much people not aware and one of the major point where people losing lots of money in the stock market.

6. Don’t follow uncle Sam or imitate others

Remember, everyone have different style of thoughts and capacity. Never follow any person on what he is doing or the base of his past success. Instead, do investing as your own. Understand the risk profile of people may vary and this would cause heavy lose to the followers..

7. Don’t be greedy

One of the major bottleneck with almost all the investors. Most of them entering to stock investment lead by greed by knowing how others make money. I am sure; this could later put them to deep trouble with total lose. Most of the people with investment desire to whom I met till today found with an intention to make money from stock market within a short period of less than 6 months. I generally advices them take lottery than investing on stocks. With such intention, they generally start stock trading or intraday trading. Finally, the market would become wealthy with their money within 6 months!

8. Learn necessary qualities of a good investor

At the very beginning as an investor, one should learn most required qualities to become a good investor. Patience, courage and prudence are some of the most required qualities to a good investor. A good investor never become panic or monitors his investments in each and every moment. In the same way, he would never buy or sell a stock is it the time is not right. Requirements of having and intellectual framework are must to stick on such most required qualities.

9. Never marry with stocks

Remember this golden advice always. Very less investors in the world really follow this rule. It is very important to understand when to sell stocks as when to buy them. A good investor should learn when to buy stocks and give same importance or more to learn when to sell stocks. If not knowing when to sell, an investor may suffer loses or miss possible profits.

10. Asset allocation models

Build your own asset allocation models. Divide capital to various investments like stocks, mutual funds, ETF’s, Gold, Arts, Real Estates, Money Markets, Debt Funds, Fixed deposits etc.

11. Read, hear and watch

Reading good material would enhance your knowledge. Subscribe to good periodicals on investments, read the biographies and success stories of great investors, hear the interviews, watch the videos of them. This would give you with better ideas on the required steps to successfully invest your money to stocks.

image by: aloshbennett