12 Timeless Investment Principles - Stackers & Investing

rollingthunder (60)in #steemsilvergold • 6 years ago

I have started a series of posts to highlight investing principles for you to consider when investing, wither it is in real estate, silver, or the stock market.

Start early. Building wealth takes time. The earlier you start, the better your chances increase for success. Let's say you invest $2000 when you child is born. Let's say you get a investment return of 12% per year. Using the rule of 72, this is how it looks. 72/12 = 6 years for your money to double. So when the child graduations High School, were looking at $16,000. Not much yet, you are thinking.

Age 24 = 32,000
Age 30 = 64,000
Age 36 = 128,000
Age 42 = 256,000
Age 48 = 512,000
Age 54 = 1,024,000
Age 60 = 2,048,000
Age 66 = 4,096,000

Thanks mom and dad for thinking of me, I never invested another dollar and I am a 4 millionaire at age 66.

Avoid market timing. Emotions play a huge role, dollar cost a fixed amount each month call dollar cost averaging.
Invest for the long term. Markets and asset prices go up and down, following # 2 will help you through the volatility.
Determine your objectives and goals when it comes to investing. Is it capital appreciation, passive income or total returns? Are you investing for retirement in a certain number of years? Down payment for a house, children's education?
What is your risk tolerance. How will you react when you lose money in the stock market. Do you sell at the first sign of a loss, or you let you investments roll.
What’s your overall investment strategy? What should you invest in? Individual stocks, ETF’s, real estate (REITS), CDs? Where will the money that you invest come from? Your job, inheritance?
Determine your total asset allocation. Asset allocation is the mix of assets of the assets you hold. Cash, Treasury bonds, stocks certificates, commodities such as precious metals and real estate are some of the major asset classes.
Diversify your total holdings in each asset class. If you hold various investments, own many different to diversify your holdings. Consider also international investments. With diversification, if one investment goes to zero, it won’t take your entire investment portfolio in the same direction.
Know the types of investment you have. Do you understand the classes of investment you are buying and why you are investing in it? Do your research in your investments.
Reinvest all dividends distributed to you. If you do not need your dividends received, reinvest them. DRIPs are one of the method where the dividends will be automatically reinvested back into the security.
Minimize your investment costs. Focus on low cost funds or into individual securities. Minimize taxes. Time out your capital gains taxes. In addition, utilize techniques like tax loss selling on your investments that were not profitable
Monitor your investments portfolio. Periodically monitor and review your investment holdings against the above principles. Learn from your mistakes. Make adjustments to your portfolio if your circumstances change, life changes, marriage, children, taking care of older parents.