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Five golden rules to get rich

Is it easy to earn money? Can I build a fortune from my ignorance? Is there a secret potion that leads to success when it comes to investing? Maybe yes. Although each teacher has his booklet, earning money has never been easy. There are those who choose to follow their instinct and those who soak up the information that floods the media every day. Some prefer to leave their money in the hands of professionals, while others trust their luck. Investing is not easy. But by following a few rules, regardless of one’s abilities, the results can be better than expected. It is, at least, what Carla Fried , editor of Money Magazine , proclaims, in one of his latest articles. Let’s see what are, in his opinion, the most important principles of action.

Be humble

Investing is a bet on an uncertain future. Wisdom consists in accepting how much you don’t know. Acknowledging it is not easy. We tend to think that the future will be like the most recent past. But we are not experts, nor can we pretend to act as such.

Being humble about what can happen in the future will keep you from making mistakes that can cost you dearly. There is no need to get on the bandwagon of yesterday and, before investing, it is essential that you ask yourself this question: “What if I am wrong?” Nothing happens as long as you comply with the second rule.

Second. Define your level of risk.

Plan. Financial planning is an unnatural act. The brain is designed so that long-term goals are undervalued and the costs of immediate sacrifice are exaggerated. Some studies show that people who make a financial plan for the future have been able to save twice as much as those who do not make any.

Knowing this, the returns you get on any investment are proportional to the risks you take. This is a fundamental law of markets. History confirms this. If we go back in time, specifically to the period beginning in 1926, shares -one of the riskiest assets- have alameda research portfolio, on average, higher profits than government bonds -categorized as medium risk- and these, in turn, they have outperformed the money market.

Among many other things, this rule suggests that, in order to obtain high returns that allow us to amass significant wealth, it is essential to allocate part of the capital to high-risk assets, such as stocks, the only investment that has beaten inflation comfortably over the years. over time. See if you are willing to withstand the ups and downs of the stock market. On the other hand, if any financial agent tries to sell you that their product offers high returns without risk, do not trust it. Ask him to give it to you in writing and, later, send the document and a letter to the competent regulatory body, just in case.

 

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