Ten Financial Tips for Everyone (Part 2)
I wrote “Ten Financial Tips for Personal Investment” back in March 2009, I still find them relevant. I shared the first five tips last week (see previous post), here are the next five tips that touch on the psychological aspect of investment.
Tip #1. Do not be greedy or let your emotions rule. Do not be tempted by high returns as high returns always mean higher risks. Remember, there is no such thing as a free lunch. A good rule: Never tests the depth of the water with both feet.
Tip #2. Have no fear. Investing in the long term means you can take a bit more risk. Equities carry a higher risk than bonds. But if your savings horizon is longer term, say more than 10 years, then you can have more investments in equities. A good rule: Never put all eggs in one basket.
Tip #3. Simplify your life and own only what you need. Have interests, not possessions. If you buy things you don’t need, you’ll soon sell things you need. And never buy or spend on credit unless it is for your own property.
Tip #4. Your greatest asset. Your greatest asset is not money. It is you. Take care of your physical, mental and spiritual health and the well being of all your relationships. That also means buying all the term, disability and health insurance you need. Remember to help others less fortunate than you.
Tip #5. Be inspired. Read good books and guides. Some of best books I have come across on the subject of personal financial planning are The Millionaire in You by Michael LeBouef, Rich Dad, Poor Dad by Robert Kiyosaki and How Much is Enough? by Arun Abey. Besides reading, talk to the right people for knowledge and inspiration.