Let`s look at some of the key principles one must keep in mind in order to meet life`s financial goals in a systematic manner :
1. Start early and invest regularly
2. Have a clear objective
3. Understand & analyze your risk appetite
“Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.“- Warren Buffet. Investing too conservatively or too aggressively, without paying heed to your risk profile, can result in failure in meeting your investment objectives.
4. Invest with a long-term perspective
“If you don` feel comfortable owning something for 10 years, then don`t own it for 10 minutes“- Warren Buffet.
5. Do not try to time the market
Always remember the old adage “Predicting rain doesn`t count; building arks does“. Timing the market is a futile exercise and one can seldom hope to get it right.
6. Adequately diversify – Do not put all your eggs in one basket
“Controlling risk is the key to long-term rewards and controlling risk means being diversified at all times“- Jim Cramer. By diversifying you will not have to rely on the success of just one investment and you will be able to confidently ride the markets` ups and downs.
7. Stick to quality. Do not chase trends
It is important to be invested in inherently good quality fundamentally strong companies with sustainable and scalable business model, visionary management with proven track record and bright prospects.
8. Do not panic
In a bear market do not panic and rush to sell your investments. Be patient. Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it. Always remember that equity markets are bound to go through cycles, however, equities have been the best performing asset class over long-term.
9. Monitor your investments
As you move from one life stage to another, your investment objectives may change. It is important to assess your financial investments in light of your changing needs.
10. Learn from your mistakes
“What we learn from history is that people do not learn from history.“- Warren Buffet. Do not try to recoup your losses by taking bigger risks. Turn each mistake into a learning experience.
11. Hire a Professional expert and trust him
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Categories: Personal Finance