Saturday, 4 October 2014

Essential Investing Advice You Cannot Afford to Overlook

The following advices come front Alan Haft on an e-book that I obtained titled, You can Never be too Rich.



I strongly believe that gaining knowledge is crucial to any journey.

Anyway, Top 10 Lessons Hollywood teaches us about Investing.

LESSONS

Lesson 1. Diversification is the Key to Success.

Tip: It's impossible to predict which genre will be hot at any given time. Some will win and some will lose, but only one thing remains certain: Reducing risk through diversification always provides the best recipe for success.

Lesson 2. It Doesn't Have to Be Complicated for It to Be Effective

Tip: Learn from E.T the Extra Terrestrial: It's a story about a bunch of kids who help a stranded alien get back home. One sentence, $756 million. How less complicated can it get? You don't need a complicated portfolio.

Lesson 3. It's the Details That Count

Tip: Without checking the facts and having proper knowledge of a certain process, you just pump money inside and find out in the future that you are screwed. Ask questions + read the details.

Lesson 4. Costs Are Critical

Tip: Commision Fees kill returns. The less they take, the more you make.

Lesson 5. Planning is Key

Tip: Without planning, you move your money into risky stuff and see your money down the drain in the blink of an eye in a moment of unluckiness. Success has no shortcuts. Many people want the fast way out. They ask for answers without having the initiative to learn and invest in themselves. (Knowledge is Power)

Lesson 6. Cut the losers, Ride the Winners.

Tip: Self-explanatory. You won't continue investing in a stock that drops constantly.

Lesson 7. Experts focus on Reducing Risk; Novices Focus on Return

Tip: I found this interesting. And surprisingly should be common sense but it never occurred to me. Again, that is why I find reading books like these beneficial. Yes, many of us are focused on returns. But how many of us focus on reducing risk in our portfolio? A portfolio of stocks which pay fantastic dividends but are extremely risky. Is it a good choice?

Lesson 8. Don't Reinvent the Wheel

Tip: Don't change what's proven successful over the years. I'm not entirely sure about this, what do you all think?

Lesson 9. Complacency is the Mother of All Disasters

Lesson 10. Defy Conventional Wisdom and Take Smart Risks

Tip: Again, food for thought.

What do you think?

Off to read the Intelligent Investor! See you all soon :)

Signing off,
Teenage Investor

7 comments:

  1. Glad that you like reading as well, like me. There are currently some good books selling at good prices in MPH Expo.

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    1. Hi Tom!
      Reading books is beneficial in many ways, if I read the right books of course! Thanks for the tip!

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  2. Thanks for compiling the salient points of what you've read. For Lesson 8, I guess it depends on what we are talking about, most of the time it is true but at times we might still need to adjust the "wheel" a bit to suit our style.

    Cheers!

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    1. Hi Richard! Here, I am assuming the wheel is the long standing concept of buy low sell high etc etc etc. There are so many strategies used by different people.

      I agree that we should tweak when necessary to achieve our own goals

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  3. Lesson 8. Don't Reinvent the Wheel.

    Let me try:-

    A1) There is nothing new (in the market) under the Sun.

    A2) This time the market is different. Don't you ever
    believe it.

    A3) Have you found your way of making money in the
    Market?
    Just repeat it.
    A4) There are more than one way to make money in the
    Market, if you have found yours be consistent.
    Sound like the same as A3). Also sound like your
    own answer. - Your tips.

    But how do you know? You will only know after some number of years of investing. That's where the problem comes in. And it's the same for everyone.

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    Replies
    1. Hi temperament!
      Interesting insight! I never quite thought of it in that way!
      I think that trying a new path will also take time to view the results. Short term results usually might be due to luck.

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