Friday, January 13, 2012

How to Get Rich - Invest With Your Head Not Your Heart

It seems that the more wealth you accumulate the more attention you attract from people in the business of selling investments.

They all have the best opportunity to make you gobs of money in a short period of time. Or at least that's what they promote. In reality, most of these so called opportunities are very high risk investments and many are actually new ventures looking for start up capital. There is usually no track record of earning any income at all.

What they try to do ( and they are very successful at it) is get investors excited about the opportunity. They show projections of what they think could happen given the parameters that they set. What they generally fail to point out is that there are no guarantees for the investors. Also, once you buy in it can be very difficult if not impossible to sell out if things go wrong.

                                                                 What To Do

Use one of the biggest rules of investing. Do not invest in something that makes you excited. Invest in something that has a proven track record of earning income for it's investors. There are many out there and most are very very boring. When it comes to investing, boring is good.

Also, know your exit strategy before investing your money. The best investments can be sold immediately if things go wrong or they don't meet your expectations. Know how to get out before you get in. Simple, but very important.

Invest with your head, not your heart. Don't let the excitement of the opportunity cloud your judgement. Always allow for a cooling off period after studying an opportunity. Never let the promoter try to tell you to buy now because the offer will sell out fast or not be available next week.  There are an abundance of good opportunities out there and most will still be there next week, next month, or maybe even next year.

Take your time before investing any of your hard earned savings. Take your time to analyse each opportunity to see what best suits your future goals. Take your time to understand exactly what you are investing in.

Investing is normally a very long term activity. Therefore, take as much time as you need to make sure you are investing in something that is comfortable and suitable for your long term goals.

Use your head and not your heart when it comes to investing. Yes, it will probably be boring, but that's ok.

As always, I welcome you comments and suggestions for future topics.

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