5 Golden Rules of Investment from Top Investors

5 Golden Rules of Investment from Top Investors

Investors don’t always agree on a lot of things. However, when it comes to matters regarding money, and how to make money, their minds think pretty much alike.

Young investors usually tend to jump in, head first, with the little knowledge they have of the markets and hope that what they have and know is enough to kick start their investments.

Chances are that maybe you hadn’t even heard of terms like spread or what it was. However, there are rules even in the investment markets. And if you choose not to follow them, then chances are that you are going to end up nowhere as an investor.

The best place to kick it off is here, reading through what some of the greatest investors of all time had to say about this business. Let’s get to it.

1. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price” – Warren Buffett

For a man known as the most successful investor of all time, Warren Buffet’s words are known to shake world markets. In Warren’s quote, he explains that when evaluating a company, you, first, need to look at its quality. Understand its balance sheets, listen to the management and the conference calls. And only after doing a proper evaluation of the company should you evaluate the price. Simply put, bargain-bin companies will always produce bargain-bin results.

2. “The big money is not in the buying and selling, but in the waiting.” – Charles Munger

Second to Warren Buffett in his company, Berkshire Hathaway is its Vice Chairman, Charles Munger. Investing is not a get rich quick rich scheme as it involves time. You cannot expect to reap huge return for a short period of time. You have to be patient. You have to wait as it takes time to build wealth properly.

3. “Do you really like a particular stock? Put 10% or so of your portfolio on it. Make the idea count. Good [investment] ideas should not be diversified away into meaningless oblivion.” – Bill Gross

Bill Gross, co-founder of PIMCO, one of the world’s largest bond funds, also has his quote which speaks more about portfolio management. Diversify your portfolio, never risk by putting all your investment capital into one name. Spread your risk and take chances after doing extensive research.

4. “You learn in this business… If you want a friend, get a dog.” – Carl Icahn

Carl Icahn is another well-known private equity investor. He is known for his tendency of buying large stakes in companies then afterward attempting to increase their shareholder value by getting voting rights. Doing this will get you enemies over time. But this quote says a lot especially in the stock and investing world. Do exhaustive research on any market before you invest in it.

5. “Be patient with winning trades; be enormously impatient with losing trades. Remember it is quite possible to make large sums trading/investing if we are ‘right’ only 30% of the time, as long as our losses are small and our profits are large.” – Dennis Gartman

From Dennis Gartman’s quote, you can learn a lot of things especially if you are a young investor looking to make it to the big leagues. One, don’t be rush in selling the moment you notice a profit. At least try and let the winning trades run. Also, don’t neglect the losing trades either. Losing a small sum of money is okay. Losing a lot, however, isn’t. Should you choose to follow Gartman’s rule, you will realize that the profits you are making from your winning trades far outpace those you make on the losing trades.

There are more to learn from experienced investors. Even experts from Northcash Installment Loans will definitely speak the same language as investors and other money management experts when it comes to money. Always remember to learn before you earn.

Tyrone is a passionate financial literacy advocate. He started this blog on November 2008 when he watched The Secret which talked about Law of Attraction because he wanted to become a millionaire and wanted to know how a millionaire acts. At the age of 26, he achieved his first million. To find out more about him, click here or follow him at Instagram

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