There’s a lot of noise out there when it comes to investing and markets. We are bombarded every day with news articles, analysis, opinions, and alerts about what’s going on and the reasons for these occurrences.
Sometimes common sense is the first to go in the face of these emotions, so I’ve compiled a list of 22 things that I believe are real investing principles.
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How much you save is more important than investment returns
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Compound interest is the 8th wonder of the world but you have to be patient to see the effects
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Being exactly right isn’t as important as avoiding a clearly wrong decision
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Costs are a drag on your investment returns
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The market won’t give you good returns just because you need them
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In the markets, emotions win in the short-term, but fundamentals win in the long-term
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Borrowed money magnifies the good and the bad
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Complexity sells better but simplicity is what investors need
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Focus on what you can control (cost, asset allocation, savings rate, taxes)
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Investor “ego” is another word for investor “insecurity”
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The plan you can stick to is more important than the perfect portfolio
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Money is worthless without a purpose behind it
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Don’t make too much of a windfall if it comes
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Allocation should be predetermined based on what you can afford to lose
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Predicting the future is a fool’s errand, but suckers will continue to pay for the existence of seers
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There is no such thing as a low-risk, high-return portfolio
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Money that is needed soon doesn’t belong in the stock market
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Good investing is usually quite boring
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Someone will always be doing better than you
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Diversification means you don’t perform the best for the year
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No one can get you out right before a market crash and get you in right before a market rise
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Good investment advice rarely changes, but people usually would rather hear what’s new, bright and shiny