5 Steps The Pros Use To Manage Risk When Investing, And How You Can Use Them
We all seem to think that the very wealthy were born with the Midas Touch. That everything they touch turns to gold no matter what the investment is. The truth is that many Wealthy people have made many mistakes along the way and now are more cautious about what investments they will get into and do their due diligence before they put their money on the line.
Don’t Try to Keep Up With The Joneses
Just because your friend or work collogue or person you pretend to like but don’t just bought a property interstate does not mean that you do. Trying to keep up with everybody else will only have you making a bad decision that could cost you a lot of money. This is where your Money Rules comes in and you have to start assessing the investment is right for you and your final outcomes.
Does This Investment Meet My Financial End Game?
Well does it? Is buying this investment going to help me reach my financial end goal. Do you want to move interstate but buying this investment will keep you here? You really want to travel but you can’t because the business will keep you planted firmly in one place you don’t want to stay? Or the property has more issues than you care to fix? It needs to meet your financial goals before you get all excited and make a decision you later regret.
Think like the wealthy….How well do you understand what you are investing in? Is this your first investment in shares/property or business if so seek advice from those who have gone before you. Attend some seminars like The Wealth Game where you can get the expert advice you need to move forward with your investment goals and make sure there is nothing you have missed
Run The Numbers
Make sure all the numbers stack up before going in and investing in something like a property or business. You need to know you are going to get a return on investment and how long that will take? How long until your capital is back in your pocket and how quickly can you start making a wage out of this business? Does the property cover all its expenses? Make sure you have a projection of where you want the investment to go.
Make Sure You Understand What You Are Investing In.
Even after everything is done can you explain what you are investing into your friend in a couple of sentences. If the answer no then you need to ask if you should be investing in said business, property or shares. The more you understand it the less risk there is for losing your money. The more you understand it the more you can get excited about it. If it’s a business you can help grow it. If its property maybe you can make a course on it and teach others? A good level of understanding can save you from making a big mistake.
There are 5 tips the pro’s use for investing. Use these to your advantage to get to your goals and your end game. Make sure each investment decision is leading you in the direction you want to go.