Investing 101

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    Constancy
    Keymaster

    When asked about the biggest finance and investing lessons I’ve learned in life, here’s what I tell people:
    (1) Margin of safety. Life is uncertain; the future is unpredictable. So, have a plan, one which creates buffers. An effective plan is all about being prepared, including for when things turn nasty.
    (2) Timeframe. Nurture a long-term perspective. Most of us are wired to be very caught up in the moment. Planning and decision making become much easier and more coherent with a long timeframe.
    (3) Budget. It is the foundation of investment planning. Income (after-tax) – Spending = Savings. Savings and returns on these savings fund your future goals. So, budgeting is the conversation between your current and future self, balancing your current needs and aspirations with your future needs and aspirations.
    (4) Margin of safety, redux. Overpaying for investments at the outset is the chief pitfall investing. So, invest with a value discipline. It allows you to participate in the full return markets make available.
    (5) Simplicity.

    • This topic was modified 2 years, 4 months ago by  Constancy.
    • This topic was modified 2 years, 4 months ago by  Constancy.
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