Foolproof Investing Rules

Here are few Foolproof investing rules which even idiots can follow without making mistakes.

These investing rules will be foolproof in actual sense.

How many will agree to this fact that investing can be done in a foolproof way?

I think only tiny minority will accept this concept.

Investing has been tagged as something which is ‘complicated’.But this notion is not entirely correct.

Even an idiot like me can invest money without making mistakes. Yes its possible.

The trick is to stick to few simple investing rules and avoid trying fancy things.

Even masters of investment says that the rules of investing are simple.

Just by knowing few tricks, one can practice it most efficiently.

Benefit of knowing these rules is that it helps us to avoid investment blunders.

All major losses in investment happens more because of bad decisions.

These bad decisions are taken because of lack of knowledge.

So idea of this article is not to give you tips about how to take wise investment decisions.

But we will suggest how to avoid bad decisions.

In fact, we must try taking lesser decisions when it comes to investing.

This itself (less decision making), will prevent majority of our investment related miseries. ?

In this article we will see some investing rules that helps to practice foolproof investing.

#1. Invest with a goal in mind

Segregate your investment vehicles on basis of short term and long term investment goals.

Short term investment goals are those which are realised within next 3 years.

Here the suitable investment vehicles are debt linked or balanced plans.

Long term investment goals are those which are realised after 3 years.

For longer investment goals, equity linked plans are more preferable.

#2. Keep it Simple

If your goal is short term, invest in debt linked monthly income plans offered by mutual funds.

Long term goals asks one to invest in diversified equity or index linked mutual funds.

If you are not sure whether you should go with debt or equity, choose a balanced mutual fund.

Keeping it simple is the buzzword for foolproof investing.

I know there are other fantastic options for investing, but as I said, simplicity will be rewarded more.

#3. Stay away from Hot Tips

How tempting it is to fall for those HOT STOCKS?

Its irrestible.

Do you search on internet about Top Performing Mutual Fund and hot stocks and buy only them?

In 90% cases, the answer will be YES.

The reason for our this inclination is not because those are good investments, but because one does not know a BETTER alternative.

Knowing alternative investment options is no rocket science.

We can make good money by investing in right options.

Just we have to invest in an informed way.

Remember, that no hot stock can ever replace the returns of an ‘informed investing‘.

#4. Invest in Auto-Pilot mode

One must automate his investing intentions.

The best thing one can do for foolproof investing is run investment-vehicles on auto pilot.

For a common man, investment of money does not come naturally.

As a result, there is every chance that other priorities will replace the investment priority.

Auto-pilot investing dosn’t allow investors to give a second thought.

Investment will continue to happen automatically month after month.

Moreover, the advantages of rupee cost averaging and power of compounding can be seen in this way.

I am talking about systematic investment plans (SIP).

#5. Buy and Hold Forever

Not many agree with this investment philosophy.

But it works fantastically when implemented properly.

It is a favorite theory of Warren Buffett. It means, we cannot ignore it so easily.

A true investor buy stocks of good companies. What are good companies?

Companies which has very predictable returns are considered good by value investors like Buffett.

So if one has stocks of a good company, which is also yielding predictable returns, why somebody will sell it?

This is one reason why good stocks can be held forever.

An informed investor ‘takes extra care’ before buying a stocks.

But ones the stock is in his kitty, he just sits back and relaxes (enjoying regular, predictable, high returns).

It is also essential to give equity the necessary growing time to exhibit faster capital appreciation.

#6. Investing today is better than waiting for tomorrow

We all know that the earlier we start investing the better.

Even if one could not start yesterday, it is better to start today and not wait for tomorrow.

Every extra-day given to money, to grow, takes one, one-step closer to financial independence.

Power of compounding of money makes investing an unparalleled and uncompromising priority of life.

Final Words

By simply sticking to these rules, even an idiot can boast of foolproof investing.

Is it hard to follow these theories?:

1. Set your goals and then invest money?
2. Keep it simple, invest money in balanced funds?
3. Staying away from hot-tips?
4. Buy mutual funds through SIP route?
5. Buy ‘good stocks’ and hold it for 10 years?
6. Starting SIP today without further procrastination?

So which SIP you want to start today? Have you identified how much fund you can spare for SIP each month?

What are you waiting for….LETS START…