Like the Ten Commandment in the Bible, the rules presented in this article collectively act as a guide toward sound and responsible investing.
1. Thou shalt set clear goals. Invest only if you have clear objectives in sight. Without this, your effort and money may soon be put to waste.
2. Thou shalt put thy financial house in order. If you are up to the neck in credit card debt or bills, investing is a bad idea. Take care of these concerns first before investing.
3. Thou shalt question authority. Investment requires the initiative to ask and answer the questions. Do not rely on what the higher-ups – CEOs, CFOS, CFAs – say will be good for investment. Educate yourself and research on concrete financials.
4. Thou shalt not follow sheep. Herd mentality has proven to be injurious in Wall Street. Accepting information without being critical consequently leads to this behavior. Check things and determine the real value of stocks.
5. Thou shalt be humble. Overconfidence leads to overtrading that in turn leads to unnecessary risk-taking and losses.
6. Thou shalt be patient. Patience is a virtue in investing because the trait pays for itself. The best behavior in a crisis is to take your time.
7. Thou shalt show moderation. When you invest in too many stocks at the same time, you may find yourself pulling out prematurely, so practice moderation.
8. Thou shalt not ogle thy investment. Over-monitoring your investment is a no-no. The more you excessively oversee, the more you want to blend investments.
9. Thou shalt not court or spurn risk. There is a unique threshold of risk for every investor by creed and age.
10. Thou shalt not make heroes of mere men. Idolizing too much of finance greats and mimicking their strategy is a bad idea. You can learn from them but need to develop an independent mind.
