Looking to get rich next year? Unfortunately nobody becomes rich overnight.
Those “overnight successes” we see are normally the results of years and years of hard and deliberate work. The good news is that when it comes to building wealth there are no secrets.The same set of principles will work for absolutely everyone! If you’re willing to put in the work and make the sacrifices one fine day you can be sure of making your dream come true.
Would like to share few Tips or Suggestions to become rich not overnight but over years.
Invest In Companies, Not Stocks
Whenever you invest in shares of a company, think that you are buying a business, not a stock. Graham and Warren Buffet, two great investors, emphasize that there is no difference between buying a business and shares in a business. When you buy a share of a company, you become an owner. However, you’re a silent owner. So, you need to make sure that you’re comfortable with what the business does, how it operates, how it makes money, and understand how the management makes decisions.
Keep Some Defensive Stocks
If you want to be successful, you need to be able to find winners, but also protect yourself from huge losses. The key is to add some defensive shares that are comparatively immune to recessions and economic slowdowns. Look for a company which fulfills basic needs, such as food and health. The consumer demand for their products or services is likely to remain intact even during difficult economic times. Investment in defensive stocks is considered relatively secure, less volatile and gives steady returns over long run. So, apart from growth stocks also add Defensive bets in your portfolio.
Accept Your Investing Mistakes
All of our investing choices are not going to be 100 percent right, all of the time. All of our purchase decisions will not be always right – that’s a fact. But it’s always hard to admit our Mistakes. Don’t allow your emotion to stop you selling such shares to avoid further loss. Don’t wait the market to revisit your purchase price. If you feel that you have entered a wrong stock, exit and look for some other alternative. Doing this will save you a lot of money in the long run!
Buy Leading Stocks, Not Laggards
A leading stock will outperform or at least keep up with the market. A laggard will under-perform. Look for high-growth companies that stand out among their peers in an industry or the whole market. A leader is not necessarily the biggest company in its market. Compare their financials, profit estimates and long-term growth. Review your portfolio periodically, say once in a year or two, and prune nonperforming assets. Continue to hold market leaders. Don’t get emotionally attached with your shares. Keep Leaders, Not Laggards in your portfolio.
Look For Less Volatile Stocks
If you’re not very risk averse you need to stay away from volatile stocks. The price of volatile shares moves more extreme ups and downs compared to overall movements in the share market as a whole. The price volatility of a share is measured by Beta. The shares with Beta more than one are considered risky. If the market takes a dive, these stocks can fall more steeply. Keep in mind that when investing for the long term slow and steady wins the race.
Will share more tips in next series, so that you will have time to assimilate.
Happy Investing!
R♥Vi
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