The 6 golden rules for investors

Sound investing means knowing how to overcome the unexpected. Here are some basic rules to keep in mind when taking investment decisions.
  1. The most important rule is to diversify your portfolio to spread risk.

  2. Investing in equities – which by definition are risk assets – requires a long term investment horizon of at least 5 years. A financial portfolio cannot be built in a single trading day. It requires a long-term vision. That is why patient investors with clear objectives are generally rewarded in the long term, since short-term market fluctuations are smoothed out over time.

  3. Risk and profitability are directly correlated: with better performance comes higher risk. Risk-averse investors, on the other hand, must accept more lacklustre performance. The key to success is to find the right balance. Take our quiz in the “What type of investor are you? section”.

  4. No one really buys low and sells high. By staying calm when the market bottoms out and keeping a cool head when it peaks, you will avoid disappointment.

  5. Don’t forget that emotions play a key role when investing on the financial markets. Contrary to the misconception that our confidence is restored in an improved environment, sometimes it's best to invest during a market correction (and that requires nerves of steel!). When the economic environment is gloomy and breeding pessimism, that's when the best “deals” can be made. Selling during heady periods is also difficult, as everyone is looking for the best returns when stocks are riding high.

  6. Managing a portfolio takes time, skill and access to quality information. Some people prefer managing their own portfolios, while others seek the help of professionals for convenience and because it gives them greater peace of mind.

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