These, no more are the 5 simple tips for sensible investor. They may seem obvious, but worth deepen them…
1- Invest in what you know: You have to be an expert in the active (company, financial product … etc) in which to invest your money. Best ignore the wise counsel from friends, relatives and the director of the bank branch or a financial advisor. If you rely only on the opinions of others to invest your money you are dead. Invest time to invest your money. No one more than you on your investments profitable.
2- Avoid hot moments invest in the market: To know whether an asset is overvalued is simple. Large numbers and logic do not lie. The shares traded on average at 30 times its profit does not make sense, that renting a house in returns of 1% to 2% does not make sense, they are figures that do not correspond to the historical average and sooner or later the seriousness of will return to your site.
3- Do not try to time the market: Try can be very fun, but I still do not know no method or system that allows me to glimpse the exact time will rise or fall in price. Apply rule number 2 and simply avoids hot markets. Remember, sooner or later will collapse and you with them if they catch you invested.
4- Save, save and save and invest your savings…: Worse than bad investing is not to save and save is not worse than investing your savings. The sooner save you much better if you have kids is to start saving for them. The time is on the sooner you start, the compound interest over long periods of time does wonders.
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5- Never put you between a rock and time: The time should be your ally, not your enemy. An effective way to convert a disastrous investment is to make the time factor plays against you. Remember, irrational markets can be kept much longer than your solvent.
Meeting these 5 rules may seem quite simple. However, it should be noted that it is not easy. Typically, we go spending our savings that time is an enemy, but we must try to follow exactly these tips. You will see that will bring results in the medium and long term.