- Know what you want – these are your goals.
- Know when you want it – this is your time horizon for when you’ll need the money – the longer you have before you need that money, the better off you are to have it invested in investments that have the potential for higher returns. These are investments with some degree of volatility in the short run.
- Know your tolerance for risk – that is the extent you’re willing to see your principal drop.
- Know that the markets do go up and down – but they never stay there and in order to achieve a decent return you must willing to withstand some degree of volatility in the interim
- Know that you haven’t made a loss till you’ve crystalized that loss by selling out.
- Know there are strategies to reduce the extent of volatility on your portfolio.
- Know the difference between investing and speculating.
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