Another excerpt from my forthcoming book, 'How to make money virtually'.............

Copyright 2004.


Investments are risky. Thus, it’s very important that you will remember these 3 basic rules when it comes to investing:

1. Allocate your assets properly. If you place all your money in stocks and you lose, what else is left of you? That’s why you have to learn how to diversify your portfolio. Choose the most convenient kinds of investment opportunities for you and scatter your money over them. If you don’t have any idea where to invest or how much you have to allocate for each of your investment portfolios, make sure that you can always ask help, guidance, and support from a portfolio manager.

2. Observe proper behavior when it comes to investments. With investments, you win some and you could lose some. Because the market can definitely fluctuate, there will be times when you will be at the losing end. For instance, if you have invested your money during the 1970s, you will likely experience one of the biggest declines in the value of your investments. Surely, you would feel disheartened and would stop investing simply because of your fear and frustration.

The reality hurts, but then you can always have the chance to bounce back. If you allow these negative emotions to reign supreme in your mind and heart, you wouldn’t be able to take advantage of the good times, where you can definitely recover what you’ve lost and, in fact, gain some more.

You should also get rid of greed. If you remember in the late 1990s, there was the onset of the tech rally. There were a lot of investors who were attracted to information technology for the simple reason that it’s a practically easy field, and the returns were very high. They have forgotten the need to allocate their money in multiple portfolios. Then things changed when these investors were greatly affected by the crash. This scenario would only tell you that you could certainly lose a fortune if you don’t diversify.

3. Be highly specific of your goals. The two basic tips will mean nothing if you don’t have any goal in your mind. What’s the real purpose for your investment? How much do you like to earn as your return? You need to be able to provide yourself with investing objectives as different kinds of portfolio have their own advantages and disadvantages. For instance, if you like to have some cash during your retirement years, you may like to invest in bonds as well as in stocks.