Following these tips gives you the best chance of investment success.
1) Be prepared to see a big “minus”
The profitability of investments strongly depends on the situation in the economy and the “degree of tension” in geopolitics.
Therefore, we must be mentally prepared to periodically see a big “minus” in our investment accounts.
And at the same time remember that a storm is always replaced by clear and windless weather.
This is what happens in financial markets: falls and crises are inevitably replaced by rapid growth in quotations.
2) Invest in quality “assets” that have stood the test of time.
You don’t want to buy “garbage” that will go bankrupt and “go to zero” at the first “bad weather” in the economy?
Yes, the value of quality assets can fall sharply.
But a good business will always “claw its way out” of any difficult situation.
Therefore, avoid investing your money in start-ups and small businesses.
Because, according to statistics, they do not “survive” during a crisis.
3) Index funds provide better financial results than active management strategies.
The natural growth of the stock market in 90% of cases exceeds the returns shown by actively managed funds.
Unfortunately, even the smartest and most educated people are not able to consistently outperform the broad market stock indices.
Therefore, it makes sense to completely abandon any speculation and trading.
4) “Bull markets” compensate for the losses of “bear markets”
Rising markets last longer (and come to us more often) than falling markets.
Therefore, investing should be considered for a long “investment horizon” of money.
We are talking about 10, 15, 20+ years.
We need to learn to “sit back” and not react to stock market crashes.
Patience brings an investor much more money than chaotic rushing around the market.
5) Understand where the risks are and actively manage them
It’s not for nothing that they say, “Hope for the best, plan for the worst.”
It is reasonable to expect in advance that “bad times” will shake the economy and markets from time to time.
In this case, we must have an anti-crisis plan prepared: a “reserve fund” has been accumulated, and the investment portfolio is balanced across different currencies and assets.