Survive The Stock Market: Advice From 8 Of The World’s Best Investors
The stock market is a scary place for the everyday people like you and me. But it doesn’t actually have to be (no, seriously). If you’re smart you can score big, but if you’re stupid? Well you’ve heard the stories from people who put their money in Bitcoin and more recently Steinhoff.
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We’ve unpacked a few of the most used quotes about investment and finances from some of the world’s richest and best investors. Because let’s be honest, while the bite size pieces of information from these guys might sound inspiring and insightful, most of the time we don’t actually have a clue what they mean. Here’s your 8-piece investment input from these money-making moguls:
1. Don’t Have Fun With Your Funds
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” – George Soros, one of the world’s most successful investors.
Our advice? Stop chasing cryptocurrencies. Buying and selling based on what’s hot and what’s not is the quickest way to lose money in the stock market. Choose about 12 companies that sell products you know and understand and get researching, looking at their average historical returns (aim for close to double digits). Once you’ve bought the stocks, forget about them.
2. Perfect Isn’t Possible
“In this business, if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.” – Peter Lynch, investor and mutual fund manager with some of the most used financial quotes.
Our advice? No matter how much research you do, how much thought you put in or how much you think you know, when it comes to the stock market, you will never be right 100% of the time. You need to remember this and know that you’re going to have some downs in between the ups. But your ups and downs shouldn’t be as extreme as the bitcoin share price. Just try to be good and do what you can so you can be right six times out of 10.
3. Control Is Key
“It’s OK to have your eggs in one basket as long as you control what happens to that basket” – Elon Musk, South African engineer and inventor.
Our advice? If you’re just starting out in the stock market, choose one place to invest; real estate, stocks or bonds. Then diversify within that investment. Buy and rent property or buy shares in different companies so if one takes a knock, the other one will be fine.
4. Avoid The Finance Frenzy
“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it” – Warren Buffet, American business magnate and billionaire.
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Our advice? Don’t get swept up in the frenzy of share sell-offs; history shows that stocks usually stabilise after declines. When investments decline and you fear losses, consider the long-term value of the company rather than the current value of the stock.
5. Don’t Be Naïve
“The four most dangerous words in investing are “This time it’s different.” – Sir John Templeton, a pioneer in both financial investment and philanthropy
Our advice? Learn from your mistakes and then don’t make those mistakes again. You can’t ignore what has happened in the past because you stand the chance of losing a lot of money. It may seem like the old rules no longer apply, what with cryptocurrencies entering the investment scene. But the old rules will always apply because it’s the stock market and it’s been around a lot longer than new innovations that come and go every couple of years. Don’t be naïve and get caught in a bad situation when the bubble bursts. And trust us the bubble will burst. Again and again.
6. Stock Market or Savings?
“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” – Robert G. Allen, author of The One Minute Millionaire.
Our advice? This one is controversial and taken as it is, could land you in a lot of trouble. What he is saying is true; you’re never going to be a millionaire by putting your money into a savings account – that interest from the bank just isn’t going to get you there. But you do need to have enough saved away that if something were to happen your life wouldn’t immediately fall apart. Speak to a financial advisor about diversifying your stock market portfolio so that you have a mix of low-risk and high-risk investments.
7. Splash Out And You’ll Cash Out
“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” – Robert Kiyosaki, founder of a private financial education company.
Our advice? If you become a millionaire when you’re 25 but you’ve blown that money by 27, you have not succeeded. At age 27 you will have gained nothing. It may be hard not to spoil yourself with the money you make but it is necessary if you want to ensure a lifetime of financial success. Diversify your investment portfolio, invest the money you make instead of spending it on things you know you don’t need. Do this and you could reap the benefits for your lifetime and your children could benefit from it too.
8. Nothing Is Certain
“”Every once in a while, the market does something so stupid it takes your breath away.” – Jim Cramer, former hedge fund manager and host of the TV show “Mad Money”
Our advice? No matter how much advice you take, how much research you do or how careful you are there is a major risk. Know that there is risk and act accordingly. Acting accordingly is making sure that you remove as much of the risk as you possibly can so that you are protected as much as you can be. Remove the risk but also embrace it, that’s the real beauty of the stock market.
And there you have it. Now we’re not saying these tips will make you a millionaire. But we’re also not saying they won’t make you a millionaire. The final takeaway? Be smart with your saving, your spending and your stocks. That’s all you really can do.