I guess this goes against everything this blog has come to say so far but stay with me, there are times when you just should not invest!!! And I'll tell you all about them with quotes by the LEGENDARY Warren Buffet.
DO NOT INVEST IF YOU DO NOT KNOW HOW INVESTING WORKS
Before you start investing, it is best to know what investment vehicles do what, know the difference between a stock and a bond; know the different types of bond, know what a mortgage is.
Research, learn and understand
“Buy a stock the way you would buy a house. Understand and like it such that you’d be content to own it in the absence of any market.”
Warren Buffet
“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
Warren Buffet
DO NOT INVEST IF YOU DO NOT UNDERSTAND THE RISKS OF YOUR INVESTMENT
Would you invest in a company that produces type writers? Would you sell the stock of a company that is about to colonise the moon? Would you play the lottery if each ticket was £100?
I'm assuming no, because those are not sensible risks.
Understanding your investments unique risks is a necessity. Knowing when to stop pouring in good money after the bad is a needed skill when investing. You cannot rush the process and understanding the investments and its risks would make the holding period alot more bearable
“No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.”
Warren Buffet
DO NOT INVEST IF YOU CANNOT SET ASIDE YOUR EMOTIONS
Patience is a firm requirement if you want to succeed at just about anything, and investing is no exception, the worst thing you can be is scared whilst watching the value of your money fluctuate with moving markets
Learn to control your emotions and you'll go a long way.
"The stock market is a device for transferring money from the impatient to the patient."
Warren Buffet
“The Greatest Enemies of Equity Investor are Expenses and Emotions.”
Warren Buffett
DO NOT INVEST IF YOU HAVE SIGNIFICANT DEBT
Though not all debt is bad, having significant debt could affect your investing abilities i.e. mortgage rates, credit score etc. Since investing has different time spans, low debt in proportion to your net worth will help keep you flexible.
“The most important thing to do if you find yourself in a hole is to stop digging.”
Warren Buffet
DO NOT INVEST IF YOU DO NOT HAVE AN EMERGENCY FUND
If I have learnt anything from this pandemic is that having an emergency fund is key, if you have all your money in investments then how will you handle unforeseen circumstances; good or bad, loss of job or Disney stock selling at $80 ? Emergency Funds are life insurance for your bank account.
Ensure you can cover atleast 6 months of expenses (Rent, utilities, travel etc) To be forewarned is to be forearmed
“It’s only when the tide goes out, that you learn who’s been swimming naked.”
Warren Buffet
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