New Year is the time when we do our annual stocktaking work and make ourselves promises or set goals. Conventional promises range from regular exercise to healthy eating, from learning new skills to quitting smoking.
What promises can an investor make to himself? A list of 9 ideas to help you be much more successful.
- Invest savings and waste money regularly in order to increase such investments. This will maximize results in the long term and create large equity capital.
- Create a "safety cushion" that allows you to cover expenses for 3-6 months or invest it more effectively. As a result, your investment decisions to achieve other goals will become much more efficient.
- Maintain sufficient capital as a reserve, ready for immediate use, to quickly seize opportunities arising in times of crisis.
- Define investment goals and allocate capital and new investments in accordance with them. Each goal may have different requirements for risk, horizon, and hence for investment instruments.
- Invest in bonds because they provide diversification and qualitatively reduce risk. Determine the proportion of bonds and stocks in your portfolio based on your investment goal. This asset allocation will determine 85% of your bottom line.
- Invest in stocks of companies whose business model you can easily understand and which are within your competence. If you don't have time to analyze stocks or the required competencies, trust the professionals or invest in funds.
- Invest with a long term perspective of several years, as you can be fairly confident that the long term return on owning quality companies acquired at reasonable prices will be fairly predictable.
- Don't get involved in the silly and ultimately futile pursuit of buying stocks at the absolute low and selling at the absolute high, as only absolute liars can do that.
- Pay more attention to costs and taxes. Keep track of costs and look for opportunities to reduce tax payments.