Here is a curated list of 10 timeless investing wisdoms from pioneers that everyone should follow to achieve financial success.
- Diversify your portfolio: Don’t put all your eggs in one basket by investing heavily in a single stock or sector. Spread your investments across different asset classes, such as stocks, bonds, and real estate, to reduce risk.
- Have a long-term perspective: Investing is a long-term game, and short-term market fluctuations should not discourage you from sticking to your investment strategy.
- Keep emotions in check: Fear and greed can lead to impulsive decisions that can hurt your investment returns. Stay disciplined and stick to your investment plan.
- Keep your costs low: High fees and expenses can eat into your returns over time. Look for low-cost investment options such as index funds.
- Don’t try to time the market: Instead of trying to time the market, it’s generally better to have a long-term investment strategy and focus on buying and holding quality investments for the long term.
- Avoid chasing hot stocks: Don’t make the mistake of buying into a stock or sector that has already risen significantly in value. This is often a sign that the market has already priced in the good news and that the stock may be overvalued.
- Be realistic: Be realistic about your investment goals and expectations. Beating market returns consistently is hard, if not impossible for most investors, especially over short periods of time. Intelligent investing involves choices, compromises & trade offs.
- Seemingly small differences in returns can make huge difference in final corpus.
- Don’t overestimate your ability to beat the market returns: Passive investing, such as index funds, is a strategy where investors buy and hold a basket of stocks that mirror the performance of a specific market index. This approach has been shown to be more effective in the long run for most investor.
- Compounding is really the 8th wonder of the world: It takes time for the power of compounding to take effect. Be patient and don’t expect overnight results.