InvestingInvesting Principles

Three principles of Investment management

A lot of people think that investing is hard and that is the main reason why they keep their money in a bank deposit with a very low-interest rate. In 2019 each of us can invest some of our savings into assets which can bring us a good income. Before doing so, however, it is important to outline the general rules you might consider useful. In this article, I will share with you 3 general principles of investment management which are very easy to apply.

 

Principle N:1 Simplicity

Usually, the simplest things work better and need less maintenance. This principle works in engineering as well as in investment. Such assets do not need your daily attention. A few hours per month are more than enough for you to keep an eye on them and see if everything is going alright or if there is a need for corrections. I think you understand why I put this principle first; the more complex the investment is, the easier it will be for things to go wrong. Simple decisions require less time. To the principle of simplicity, I also include the automation of managing my money. This means to have precise and clear goals followed by a strategy for their realization. If the financial plan works and you achieve the planned results, there is no need to make any changes to it.

 

Principle N:2 Long-term Investment

By using the word “investing” I mean putting money into assets for a long period of time, usually more than a year (this is quite a long time in the Cryptocurrency market). There are two reasons for this. The first reason is related to risk. Economic cycles and the ups and downs connected to them are inevitable just like taxes and death are. The easiest way to gain profit is to invest in the long term and ignore the temporary fluctuations because after all, after every drop there is a rise that follows and these things happen all the time. We should concentrate on the bigger changes in the market.

 

Principle N:3 Personal Responsibility

When you are a novice in a given sphere, you tend to fully trust people who have prior experience and knowledge in it. Yet, the employees of large banks and financial institutions protect their own interests and those of the companies they work in. My interests as a client come afterward for them. It is good to seek advice, but in the end, you have to make the decision by yourself based on your own experience because you will be the one who will bear the consequences of it.

Try to do things your way and manage your finances personally. Ideally, you will learn from many people but won’t neglect your principles and strategy just because something is trendy or someone else told you so. Before putting your money into a new company or organization try to fully understand its activity and its product idea. Everything else is close to gambling. Please, do not let mere chance determine your destiny. Just strive to do whatever brings you joy and pleasure. Nothing should be attained at all costs. Money is only a means and wealth is not an end in itself. In the end, feeling well and being happy stands above all else.

 

! Disclaimer: This is not financial advice, just the author’s views regarding the subject matter. This is for reference and informational purposes.

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *