3 Investments Tips That Will Make You Wealthy

3 Investments Tips That Will Make You Wealthy

…investing in ourselves is the only way to become wealthy…

…and yet, there’s so many complicated words, and sometimes it may seem like you need to get a degree to understand it all…

…this post explains the 3 tips that all seasoned investors use to grow their wealth, and most everyday people never learned…

…read on if you want to become a wealthy investor…

  1. Invest on a Budget: Dollar Cost Averaging

    …when you invest, it’s good to set a monthly dollar amount…

    …and invest it whether the market is up or down…

    …so when the market is down, your money buys you more shares…

    …and when the market is up, your money will buy you fewer shares…

    …as long as you are investing for the long term…

    …and as long as you don’t sell low…

    …then you will average out the lows and the highs in the market…

    …this is called dollar cost averaging…

    …the graph below shows how when the price goes up, you buy less and vice versa…

    …this type of disciplined invested will allow you to grow your wealth and give you peace of mind as you won’t have to check how they are doing all of the time…

    …it becomes automated…

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  2. Diversify or Not to Diversify – That is the Question

    …according to most it is important to diversify your investments…

    …for instance, you don’t want to invest all your money in Australian dollars and then come to find that the Australian dollar declines for years and you are locked in a losing position…

    …the popular advice is that you should invest in a diverse number of investments so that when one is down, the others are up…

    …for instance, perhaps the real estate market and the stock market has crashed, well then commodities like gold might be on the rise…

    …it’s almost the dummy proof way of investing so that you are guaranteed to win some even if you lose some…

    …now another opinion from the book The 80/20 Principle: The Secret to Achieving More with Less by Richard Koch is that you should put all of your eggs in a few well researched baskets and watch them like a hawk…

    …Koch points out that only 20% of your investments will constitute 80% of your wealth…

    …so instead of diversifying across the board, find the few really good investments and put in all your money there…

    …in the end, I do both…

    …I have funds that are diversified in a 401K and also my own funds where I focus mainly on a few high dividend yeilding stocks…

    …below is one suggested diversification strategy that I use with my 401K from It’s Not About the Money: A Financial Game Plan for Staying Safe, Sane, and Calm in Any Economy by Brent Kessel:

    U.S. Large 21%
    U.S Large Value 21%
    U.S. Small 9%
    U.S. Small Value 9%
    International Large Value 8%
    International Small 8%
    International Small Value 3%
    Emerging Markets Portfolio 3%
    Emerging Markets Small 3%
    Emerging Markets Value 3%
    Real Estate 10%
    Commodities 5%

    …You can use funds that are made up of the classes of investments above…

    …if you don’t have that much variety available in your 401K, you can combine the Large together, the Small together, and the International with the Emerging Market…

    …also, I think in general most people are heavily over invested in Real Estate, especially if they have a high mortgage…

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  3. Buy Low and Sell High: Balancing Your Portfolio

    …as you start to buy stocks, you create what’s called a portfolio, or your group of stocks…

    …in order to ensure that you make the highest profit possible with your portfolio you need to learn how to buy low and sell high…

    …this can be done in a way that avoids emotional trading…

    …I will tell you from personal experience that it’s easy to say “Buy low and Sell High”…

    …however when you see your shares drop in value and the dividends drop too, you are not very likely in the mood to buy more…

    …and yet that’s the best time to buy more!!!

    …so how can we keep our emotions in check and profit from our investments?

    …it’s called balancing your portfolio…

    …let’s say you decide that you want a certain mix of stocks as such:

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3 Replies to “3 Investments Tips That Will Make You Wealthy”

  1. Thanks for the financial lesson, Mey…you really got me thinking about what where my money would be focused if it were not as diversified….

    1. You’re welcome Sharyn, I personally like getting dividends from REITS, good luck with your investing!!!

  2. I wish I knew more about the stock market. I am not a “financial” person, per se. In fact, I have what’s called “numerophobia,” i.e., fear of numbers. I would rather stare at a blank page and write an essay on the food chain than do my checkbook. Don’t get me wrong. I can do my checkbook, but when it comes to the stock market and financial stuff, I am at a total loss. Thanks for your post and writing it in “layman’s terms.” It was very easy for me to understand.