10 Rules for Long-term Investment
If your investment goal is to make a profit within a few months to a year, then this is not an investment, but a transaction. The only investment method is long-term investment. Here are 10 golden rules for sustainable long-term investment:
1. Never invest in something you don't understand: Before investing in anything, be sure to do your homework. Thorough research and assessment of risks before investing can prevent you from suffering economic losses. Considering the bull market cycle of Bitcoin in 2017, many novices blindly invest without understanding the fundamentals of cryptocurrencies. Bitcoin hit a high of $20,000 and then fell to about $4,000. Those who trusted it again sold it for $69,000 in 2021.
2. Set clear goals: Profit booking is far more important than profit. Booking your profit at the right time is an integral part of the investment process. Make sure you define a clear goal and stick to it. The result of a rush is often bare-handed.
3. Risk management: Remember that greater profits are accompanied by greater risks. Evaluate your goals and manage your risks accordingly. Only risk the amount of loss you can afford. If saving your money is the priority, then even if the profit is low, only consider investing in a safe way.
4. Diversify your investment portfolio: There is a good saying, never put all your eggs in one basket. Diversify your investment by investing in the proportion of the total investment of each asset. This will reduce the risk of complete failure, and if one thing does not go well, the other will be compensated.
5. Avoid getting rich quick plan: There are countless scams in the market, mainly to show you fantasy and succeed overnight. Remember, Rome was not built in a day. Never trust those people, good luck to them!
6. Compound interest effect: repeatedly reinvesting your profits will help increase your net assets and returns. Compound interest is just investing back the money you earned. This is a good way for long-term investors to increase their income.
7. Avoid prediction: no one can predict buying low and selling high. If they are so confident, they will win themselves instead of telling you. Never try to predict the market, especially when the market is volatile. Just focus on the fundamentals and enter with a long-term vision. Avoid panic and greedy decisions.
8. Follow the trend: The market trend is constantly changing, and the best investors always follow the trend when it is not common to the public. Entering a trend when others are uncertain is a great way to succeed, and this only happens when you keep up to date.
9. Buy fear, sell greed: Buffett said, "Others are greedy and I am afraid, and others are fearful and I am greedy." When the market falls, people usually panic selling and become afraid of investing. This is when you need to be confident and enter the market. Similarly, when the market skyrocketed, people became greedy and reinvested their profits, leading to failure when the direction changed.
10. Rebalancing the investment portfolio: Long-term does not mean investing and forgetting it. You need to rebalance your investment portfolio on a regular basis. Don't be too rigid, be tolerant and adapt to the changes of the times.