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How to Make Sound Investments

By: rbayle


  Worried about your future? Here, the seven rules of commonsense money making approach.


Instructions


Step
1

Go with what you know. Buffett recommends investing in companies and products that you are familiar and comfortable with - and whose businesses you understand.

 

Step
2

Don't put all your eggs in one basket - but don't spread your assets too far. Rather than investing all your money in just one stock, concentrate on a small number of gems - say, ten or twelve. That kind of diversification will help protect your money, so that if one stock fails, you won't lose huge amounts.

 

Step
3

Pay no attention to the stock market. Forget about inflation, interest rates and recession. Don't look at the stock tables in the newspaper and turn off the stock market summary on the TV. The bottom line: No one can predict the economy. Don't try to, and save your energy.

 

Step
4

Master your emotions. When people feel greedy or scared, they tend to buy or sell at foolish prices. rein in those emotions. Before you buy stocks, make sure you're prepared to deal with the stock market's volatility. Expect your holdings to fluctuate - sometimes quiet a bit.

 

Step
5

Invest in history. Has the company you are planning to invest in been around for a decade or more - long enough to demonstrate a consistent operating history and sustained ability to earn profits? if so, it's a good sign; if not, think twice before you decide to hand over your money.

 

Step
6

Keep your eye on a company's cash. How does management reinvest its earnings? Look for businesses that generate more cash than they need and then invest their windfall in projects that produce good earnings, or return money to shareholders by increasing dividends and buying back stock.

 

Step
7

Seize the day.Once you've found an investment you think is a winner. don't be afraid to put your money down, and don't let fear of finances hold you back. And don't expect miracles.

 

 

 

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rbayle

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