What if everyone grew up knowing the best ways to spend, save and invest money? Would there still be lessons to learn? Would you lose money invested in stocks? Would there even be a market?
Not everyone talks about saving and investing around the dinner table. If you want to learn more about money matters, investment lessons can be learned from successful investors.
An article by Kathy Manson on Lifehack lists seven investment lessons. Let’s look at a few of them.
Plan For The Worst
The article says, “Tragedy can happen at any time.” Maybe you’ll get sick, lose your job or have the value of your portfolio drop. You must also plan for the possibility of your death and caring for your dependents after you’re gone. Plan for the worst.
It offers suggestions to have in place before you consider investing.
- An emergency fund to cover your bills and expenses for at least six months.
- Good medical insurance to protect you and your dependents.
- A life insurance policy to take care of the people who depend on you.
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Keep Working
While you’re young and strong, “Keep working for as long as you can because you have the best asset of all: Time. The longer you work, the more money you have to invest. If you don’t plan to have any retirement income, (side business, properties), then you need to work as long as you can, so you can build up your retirement fund.”
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Invest In What You Know And Like
Warren Buffett didn’t invest in tech stocks and start-ups during the famous dot-com boom in the late 1990s because he didn’t understand how they worked or made money. Because of this, he was saved from that crash.
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“Before you invest in individual companies, think of it as investing in a real business. Study the company and actually spend your money buying their products and services, then this could be a bonus,” advises Manson.
Invest In The Long Term
The article tells of the excitement portrayed in movies where traders on Wall Street are able to make millions “at the turn of a hat. However, unless you have a lot of money, skill, and time, you can’t make a lot of money with individual stock purchases.”
Yet, “something that has been proven is the power of long-term investing. If you invest now in good stocks from reliable companies and leave it there for 20 years, you can have enough time to ride out any dips and still come out on top,” continues the article.
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From Traders Magazine, in an article titled “The Most Important Lessons You Will Learn From a Stock Market Crash,” comes this caution:
Never Let Your Mind Play Tricks On You
“Psychology plays a big part in whether you’re a success or a failure in investing, but, in particular, the fallacies you have yet to learn and unlearn,” states this article. It goes on to explain how believing that recent events will continue in the future can prove harmful.
The article gives this example, “If you’ve never experienced a bear market before, a statement like, ‘Stocks have risen for the past 10 years, so they’ll continue climbing,’ seems logical, but to someone who’s lived through both the dot-com bust and the Subprime crisis eras, not so much.”
Take the psychology and the emotions out of investing or trading and you’ll mitigate your losses. Machine learning A.I. doesn’t care what your friends or family are recommending you invest in.
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