There is a lot to learn as a first time investor. Here are 3 principles to follow for successful first time investing
Margin of safety is the principle of buying a security at a significant discount to its intrinsic value, which is thought to not only provide high-return opportunities, but also to minimize the downside risk of an investment. In simple terms buy assets worth $1 for 50 cents.
Investing in stocks means dealing with volatility. Instead of running for the exits during times of market stress, the smart investor greets downturns as chances to find great investments. This is illustrated this with the analogy of "Mr. Market," the imaginary business partner of each and every investor. Mr. Market offers investors a daily price quote at which he would either buy an investor out or sell his share of the business. Sometimes, he will be excited about the prospects for the business and quote a high price. Other times, he is depressed about the business's prospects and quotes a low price.
Investors should know their investment selves. To illustrate this, make a clear distinctions among various groups operating in the stock market.
Active and passive investors are "enterprising investors" and "defensive investors."
You only have two real choices: The first choice is to make a serious commitment in time and energy to become a good investor who equates the quality and amount of hands-on research with the expected return. If this isn't your cup of tea, then be content to get a passive ( possibly lower) return but with much less time and work. the academic notion of "risk = return" on its head. For him, "Work = Return." The more work you put into your investments, the higher your return should be.
