1. Put Your Money To Work
Investing is about putting money to work in effective ways to make more money. The most effective way to put your money to work over the long term is in well-run, profitable companies. Companies that are good stewards of your money, will help you create a level of wealth that you couldn’t generate by merely saving your money.
2. Investing is not a Game
Many people mistakenly think of investing in the same way they think of sports or gambling: as a game. Watch CNBC for a day and you’ll see what we mean. The ups the downs, the highs the lows. The stock market, over the short-term, can provide entertainment value and adrenaline rush.
But investing is not a game. Your goal is to make more money, and it turns out that over the long-term, there are intelligent and rational strategies for growing your money. The reason you make money should actually make sense! Remember: don’t treat investing as a game of chance. Understanding why your investment makes you money is the key to being a common sense investor.
3. Risk is relative
It is not uncommon for financial advisers to give very bad advice. One of the most common pieces of bad advice is the view that saving your money in something like a CD is less risky than investing it in stock equities. Why is this not true (most of the time)? Because history tells us that risk is relative. Over a 15 year period of time it is clearly more risky to leave money in a CD than in good stock. While your balance won’t erode, the purchasing power of your money could due to inflation and taxes. Over periods of time that are greater than three years, the common sense investor understands that, ceteris paribus, the best place for money is in stocks.
4. Invest in Good Companies, Avoid Bad Companies
The common sense investor entrusts his money in companies that put money to good use. Good companies will use money in effective ways to produce more wealth. One of the best ways to identify good companies is to look at their Return on Equity, which is essentially a measure of how well they create profits using shareholder investments.
5. Don’t Pay Too Much For a Good Thing
Even if you’ve found a good company, don’t invest in the company unless it’s being sold at a reasonable price. Ideally, try to find good companies that are selling at a discount. Often times, you will have to go against the flow and buy into companies that are out of favor for one reason or another (often irrational) with investing professionals. Normally, a company is priced too high if it’s Price To Earnings ratio is higher than its Return on Equity.
6. Fear the Following of Fads
Following the crowd can be disastrous for the common sense investor. More often than not, it results in paying way more than a company is worth. If the price of a company is dictated by short-term exuberance rather than long-term rationality, it should be avoided.
In fact, the common sense investor can take advantage of the fact that in the short term, stock market exuberance is often irrational. If the boys on Wall Street are too extreme in a sell-off for a good company, you should be ready to buy.
7. Time is on Your Side: the power of compounding interest
Give your money as much time to grow as possible. If your money doubled every five years, then five thousand dollars would turn into 0,000 in thirty years. Over 10 years, it would only turn into ,000. Big difference.
It seems like magic, but it’s not. The earlier you put your money to work, the longer it works for you, and the more wealth you generate. It makes a lot of sense if you think about it. Wealth is generated via production. The longer your money works in good companies, the more time it has to produce further profit; profit which you get to share. The cool thing is that you can put all of your profit back to work, and effectively have more money generating more profit. This process can keep iterating so long as you don’t withdraw your money.
8. Some Debt is Good Debt, But Most Debt is Bad
Why pay off a debt that is accruing a 5% tax-deductible interest when you could be generating 12% interest by investing your money instead? Many people make the mistake of trying to pay down their home mortgage early, but this is often unadvisable for several reasons. First of all, the money you pay towards your mortgage is not liquid and gets tied up in your home until you sell. Second, mortgage is often tax-deductible. You can’t take advantage of this tax break if you avoid the interest.
Having said that, most debt should be avoided. Never sustain credit card debt and try to avoid all debt that will be used to purchase items that depreciate (e.g. cars, clothes, toys). Debt can be emotionally and psychologically difficult to sustain so only carry good debt if it doesn’t affect you aversely.
9. Keep It Simple
Always, always, always understand your investments. Understand the company’s business model: how they make money. If the business model seems odd (read: Enron) or complicated or unfocused, avoid the company, even if it means that you have to avoid the temptation of following the crowd.
Companies make money by producing products and services that people or businesses want and need. Make sure you understand what products and services your company are producing and developing for profit.
10. Employ Disciplined Principles
Invest regularly and intentionally. Force yourself to put your money to work, but don’t just throw your money at any investment. Choose your investments wisely. Don’t chase after fads. Fight your emotions. If you feel like selling (the market is doing badly), you should probably consider buying and if you feel like buying (the market is doing well), you should probably consider selling.
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Golden rules of HYIPer
There are some golden rules, every participant of high yield investment need follow. Disregard of them may give you the possibility to lose all you money instead of big profits. Golden rules are the result of investing to HYIP during a long period of time. They are confirmed by method of attempts and mistakes. Follow golden rules you will receive the possibility to minimize risks increase profit and avoid SCAM.
Rule1: Prepare to Lose
Be prepared to lose and only invest money you can afford to lose. Always invest in HYIP to earn extra income for other purposes such as setting up a business.
Rule2: Zero Emotion
Don’t let your emotion do your investing. Don’t be Greedy!! Don’t be afraid!! PLAN PLAN PLAN!! Stick to your PLAN!!
Rule3: Diversify
Diversify your money into 10 to 20 programs. What to diversify into? It will depends on what type of investor you are. Usually only 70% or more of your investments will fail before you even get back your 100% of your money. However, your remaining investments will pull through long enough to coverup for the loss.
Rule4: Get Capital ASAP
Always take out your capital as soon as possible before you do any compounding or reinvesting. If you are Mr Hell, then you might ignore this rule.
Rule5: Grow Wisely
After you have got back your capital, begin to compound. 100%,75%,50% or 25%….its your choice. Higher compounding rate if your program is doing well. 0% compounding if your program is dying.
Rule6: Research
You must always do you own research before you enter into any program. Read the forums, read the monitoring sites.
*
Ask yourself these questions:
- who are the administrators?
- are they responsive?
- where are they from?
- which monitoring site are monitoring them?
- what are the comments given by the public?
- how did they get their income?
- how long have they being operating?
- what documents do they have?
Rule7: Sceptical
Always be sceptical loser before you enter any program. When you are a sceptical person, you will do 10 times more research than an idiot who joins a program blindly.
Rule8: Watch for Warning Signs
When you are involved in a program, watch out for the warning signs!
If your program is failing, don’t bother crying over it. Look elsewhere for a better investment.
Rule1: Prepare to Lose
Be prepared to lose and only invest money you can afford to lose. Always invest in HYIP to earn extra income for other purposes such as setting up a business.
Rule2: Zero Emotion
Don’t let your emotion do your investing. Don’t be Greedy!! Don’t be afraid!! PLAN PLAN PLAN!! Stick to your PLAN!!
Rule3: Diversify
Diversify your money into 10 to 20 programs. What to diversify into? It will depends on what type of investor you are. Usually only 70% or more of your investments will fail before you even get back your 100% of your money. However, your remaining investments will pull through long enough to coverup for the loss.
Rule4: Get Capital ASAP
Always take out your capital as soon as possible before you do any compounding or reinvesting. If you are Mr Hell, then you might ignore this rule.
Rule5: Grow Wisely
After you have got back your capital, begin to compound. 100%,75%,50% or 25%….its your choice. Higher compounding rate if your program is doing well. 0% compounding if your program is dying.
Rule6: Research
You must always do you own research before you enter into any program. Read the forums, read the monitoring sites.
*
Ask yourself these questions:
- who are the administrators?
- are they responsive?
- where are they from?
- which monitoring site are monitoring them?
- what are the comments given by the public?
- how did they get their income?
- how long have they being operating?
- what documents do they have?
Rule7: Sceptical
Always be sceptical loser before you enter any program. When you are a sceptical person, you will do 10 times more research than an idiot who joins a program blindly.
Rule8: Watch for Warning Signs
When you are involved in a program, watch out for the warning signs!
If your program is failing, don’t bother crying over it. Look elsewhere for a better investment.
HYIP scam/problem (dont invest here)
10 principles for the common sense investor
Labels: HYIP Info
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