Investment Strategy - Basic rules of investing

Investing your money can be a great way to ensure your financial success in the future. With the correct choice of investments, you can be sure you have emergency money for the education of your children, and to have it available for the time to leave work.

There is an important phrase in everything, just said "right". If you make the wrong investment, you can end up worse than it started Bankruptcy.

Many people who invest wisely and make good decisions with their money follow the same basic patterns of investment. It may be cynical type of person who chooses to believe in the basic rules that may not be as easy as they seem, in an area that is complex. However, these rules have survived the test of time.

First of all, make sure the money you choose to invest is in effect for the purpose. As in any game, there is nothing to gain and much to lose when it comes to investing. There are many consultants as Robert Kiyosaki, Say "Do not invest what you are not willing to lose." Never put money that you cannot afford to lose in case of recession or market problems.

A rule that people seem to refuse to apply in any area of their lives, including the investment world is not lean on your own understanding. Often, this happened in people who refuse to trust the help of a financial advisor for their money, believing that with a little understanding of the market they can invest in itself. This kind of thinking is totally wrong and misguided.

First, most people are not able to decipher the complicated graphs, pie charts, statistics and full of information where the investment world is related. To understand what the numbers mean, you need basic training. That may come after you have experience in the market, and thereafter be able to make good decisions on your own.

Think long term. Unless you're investing millions of dollars initially, it will take time of your investment mature and begin to earn substantial profits. The best investments are those that are approve of the time, so it is best to place your funds in long-term investment, at least for a few years.

The two investment strategies

There are two reverse trends:

Diversification
Diversification is a way to protect the common scourges of the world of investments. A good portfolio will include cash and cash equivalents (GICs, fixed annuities), growth investments (stocks), growth and income investments such as mutual funds. Diversification does not ensure that you have all your eggs in one basket. Keep in mind that diversification does not just mean investing in several areas, but also ensure that any area contains a proportionate share of funds.

Specialization
I think the best way to explain it is to take an excerpt from the book "The Cash Flow Quadrant" where the author Robert Kiyosaki mentions the following: People who seek security are widely used the word" diversification " Why? This is not an investment strategy to win. Successful or wealthy investors do not diversify. Focus their efforts.

Another investment expert mentioned in the same book, Warren Buffet says that the portfolio concentration or focus on a few investments, instead of diversification, is a better strategy.

Now, whether you diversify or specialize with your investment. That depends on the type of person you are. You are someone who likes to learn no matter how difficult the issue and hate back, thus specialization is for you. If you want to be more passive and leave it safe then diversification is the option you are looking for.

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