Investing Rules to become Rich


1
There are basically only four roads to wealth
You can marry it You can inherit it You can ge
t a windfall (from a lawsuit settlement lottery
or some other unexpected good fortune) or
You can accumulate it. Most of us are stuck with
option 4 - accumulate it. To do so we need to
understand how to manage cash flow .
2
Live within your means It takes financial discipl
ine and sensible behavior to successfully
accumulate money and grow wealthy.

3
Avoid Taking creditsLearning to live within your
means leads to a freer life - debt can be a mean
master instead of a worthy servant. Possibly the
biggest trap out there is easy credit which lets
us buy numerous things we might not need. Save
first spend second. If you do so building
wealth will be a lot easier for you.
4
Save Aggressively This does not mean invest aggr
essively. Rather it means making it an absolute
priority to set aside 10 per cent of your income
right off the top and even more if your goals
tell you to do that. The longer you wait to start
saving the larger the percentage of your current
pay you will have to save to reach your goal.
5
DiversifyNo investment is risk free only a
diversified portfolio can mitigate the risks of
market cycles. Weve all been warned against
putting all our eggs in one basket even Warren
Buffett said Its better to be approximately
right than definitely wrong. By approximately
right he was referring to diversification.
6
Dollar - Cost Average When buying shares remove
emotions from your investing by automatically
buying more shares or equity mutual fund units
when they are cheap. Emotional investing gets too
many people in trouble. . Dollar-cost averaging -
by investing a fixed amount in regular intervals
- is the best way to make money in a variable
market over time. Remember you need a longer tim
e horizon when investing in the stock market.
7
Be PatientWarren Buffet says The market has a
very efficient way of transferring wealth from
the impatient to the patient. Time in the
market is more important than timing the market.
8
Understand Volatility Over time returns from
investments regress to a mean. Regression to the
mean simply means that highs and lows will
average out so that your return regresses to a
certain number or range. Understand an
investments range of returns so you know what to
expect annually and over time.
9
Manage your Taxes Have you ever considered how ta
xes are your biggest expense in life - more than
mortgage expense education expense or any other
expense So you must take advantage of all tax
breaks available - each and every single one of
them.
10
Think before you InvestDont chase returns
before chasing that incredible return find out
how the investment did during the last bad market
for that asset class. Find out its risk and ask
yourself whether you can stomach a bumpy ride
over the long term.
11
Get Advice from Experts Never underestimate the v
alue of good advice. A good financial adviser is
like a personal trainer for your finances and can
get you on track and keep you there until your
goals are met. And even more critical than
getting the advice is being sure you consistently
follow your game plan. The greatest problem for
most people is procrastination and erratic
investment behavior. So get started get advice
and get going down the road to wealth - and
steadfastly follow through.
12
Periodically rebalance your portfolio.