Things investors should keep in my mind while making an investment
Albert Einstein once said, ‘Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.’ The good thing about what he said is, its not just applicable to compound interest but for any kind of investment. If you’re investing, you need to know what are you investing in? Why are you investing? And what are the probable consequences of your investment?
Investment is a way to make your money work for you while you’re making money to invest more and even when you’re on holidays, spending money and having good times. But, investment is not only about money, it requires a lot more than money to make your money work for you. To make your money work for you to make more money, you must make wise decisions and to make such decisions, you must take care of few things and those are:
Think long-term
If you want to be rich instantly then trust me, investment is not the way but it can definitely make you richer if you have investment plans for long term. After you’ve invested your money, try not to worry about short term fluctuations/variations but also at the same time don’t forget to keep an eye on the asset you’ve invested on. And, for that you’ll have to keep up with the market conditions.
Risk diversification
As you all know, investments you make are always exposed to several risks. Risk diversification means, diversifying your investment in more than one asset in order to minimise the risk. Investing both in short term assets and long term assets makes your investment more profitable and less risky.
Fundamental Analysis
Just because the asset has a good past performance doesn’t significantly mean that you should invest in it blind-folded. As a investor, you should always carry out a fundamental analysis of the asset in order to measure the scope of growth of the asset you’re planning to invest on.
Market Status
Reading market conditions is very important when you’re planning to invest. If you don’t know the condition of industry of asset you’re investing in then you might end up making a wrong investment decision. So keep yourself updated about the market conditions of the economy you’re part of.
If you want to be a wise investor then like every other wise men you must read. Even Warren Buffett insists investors to read as much as they can. Reading provides you the insight of the market conditions and also keeps you updated about the best assets to invest on. So keep reading, and keep investing wise.
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