THE 5 GOLDEN RULES
OF INVESTING

A very wise man once said:

“Rule number one of investing: Never lose money. Rule number two: Never forget rule number one”.

To hopefully achieve this, we’re here to give you more constructive rules.

So kick back and get this: Here are the 5 golden rules of investing.

Rule number 1 may sound pretty obvious, but it’s crucial: 

Understand WHY and WHAT are you investing in.

Too many newer investors are making the error of investing in something that they don’t understand and this can lead to irrational decisions.

Investing is a marathon, not a sprint, so take your time, learn about the different asset classes you can invest in and then make a more informed decision about whether a certain asset is what you would like in your portfolio.

Rule number 2: Make A Plan

Making an investment plan is about creating a process and having clear goals and a strategy.

Make sure you understand what you are investing in, have patience to reach your goals and trust the process.

If you want to practice, remember that you have your virtual portfolio to try out things without having to spend a single dime.

Rule number 3 Diversify

You’ve probably heard of the saying ‘don’t put all your eggs in one basket’, right?

Well, it is the same for investing. Don’t put all your money into one investment. Portfolio diversification is a form of risk management as it helps to spread the risk of your investments.

Diversification can be done between different asset classes, industries and geographic locations.

So when you diversify, if one of your investments doesn’t do so well, you still have other investments that may perform better and hopefully mitigate the loss.

However, if you have a big exposure to one investment and it fails for whatever reason, then it will have a bigger impact on your portfolio.

So, to sum it up – Keep calm and diversify.

Rule number 4: Make sure you are ready for anything.

Markets are volatile. Things change, and not everything will go as you plan.

The fourth rule is to make sure you are ready for different scenarios. To do so, see if you can answer yes to all of the following questions:

Do you have an emergency fund available?

Are you prepared to leave your money invested for the long-term?

Can you weather the ups and downs of the market?

If the answer to these questions is yes, then you’re probably in a good position to get started in your investing journey.

If, however, the answer is no, then you are better off working on getting in a better position before getting involved.

Rule number 5: Never stop learning.

Investing is a journey of constant learning, so make sure you feed yourself with updated knowledge along the way. Find your sources of information and follow them to stay updated.

That’s it for today, but that’s definitely not the end. As another wise man once said, it is not even the beginning of the end. It is, perhaps, the end of the beginning.

Stay tuned and follow the eToro Academy for more content for your investing journey. See you soon!