6 Tips for Smart Investing
On today’s podcast, I am talking to Saleem Khatri, founder of the website Instavest about his top 6 tips for making smarter investment choices. I am someone who always had a fear of investing; however, after getting trained as a financial advisor, I realized that most of my fears were unfounded and simply the result of a lack of education around investing.
One of the biggest requests I always get from my podcast listeners is to talk more about investing, so I thought that it would be a good idea to start with some framework around smart investing. Saleem shares so great tips that you can employ easily to help you make smarter investing decisions.
What are we drinking?
Saleem — Coffee
Shannon — Seltzer water
6 Investment Tips
Only invest money you won’t need for a while
- Decide what your cash needs are and then only invest extra money you will not need for a while
- Understand what you are investing for so you don’t make the mistake of investing money that shouldn’t be invested
2. Make a written plan for how much you want to invest and follow that plan
- A good rule of thumb is to not make any one investment larger than 4%-8% of your entire portfolio
- No one investment is perfect and goes up all the time so you want to manage your risk by sticking to your plan
3. Buy stock/investments with a margin of safety (at discounted prices)
- If you are looking to buy a particular stock, research where the stock price normally is and then purchase the stock when it’s discounted.
- Check to see why a stock is discounted to see if you should add it to your portfolio
4. Diversify your portfolio
- You want to invest across several different sectors
- Diversifying reduces the chance of any one investment sinking your portfolio if it goes bad
- An easy way to diversify is by purchasing an index fund
5. Don’t be emotional
- Don’t panic if the price of a stock you own goes down and panic-sell
- Review the situation; remember, even the worst case situation is manageable
6. Be patient
- Think long-term; Don’t be emotional and start thinking short-term
- Investing is not exciting and sexy, but it will get the job done
- Make exciting and sexy investing moves with extra money, not your core investment money
- Twitter: @goinstavest
- Website: www.instavest.com
Random Three Questions Salem Answered
- Which do you prefer: east coast or west coast living?
- What is your favorite book about investing?
- What is your favorite thing to do during your down time?