Are you new to the world of investing? Do you want to make more money and have a stable future? Well then, you’re in the right place, ‘cuz today we’re discussing some expert tips that might help you become a pro in investing.
During the 100th episode of Inside The Rope (which aired on September 6, 2021), host David Clark was joined by Hamish Douglass, Co-Founder, Chairman, and Chief Investment Officer of Magellan Financial Group. In the segment, Douglass shared some investing tips he learned from renowned investors through the years. Let’s have a look at some of them.
#1 – Be adaptable
In the world of investing, facts keep changing. A company that’s at the top today might go down in value tomorrow and be overrun by its competitors. In such times, you have to be adaptable. You have to face the facts and work on the present. If you keep believing in what has gone, you’ll never be able to survive.
The same goes for wrong investments. It’s natural for people to make mistakes, but what matters is they admit to them and move on. If you keep lingering on what you did wrong on past ventures, you’ll lose out on current or future investments, and your average portfolio will fall. Believe us, when that happens, you’ll be more depressed than before!
#2 – Always keep the margin of safety in mind
Douglass recalled that the best thing he learned from Ben Graham and his book, Security Analysis, was the need for a margin of safety. He explained that everybody wants to buy assets at a price less than their worth. That’s because it gives the investor room for errors, known as the “margin of safety”. In the future, if something goes wrong with those assets, you’ll at least be satisfied that you didn’t invest a lot in them.
#3 – Believe in the power of compound interest
The best thing about investing is to be able to see beyond the current scenario. Whenever we invest, our goal isn’t to increase the money in the next two or three years. It’s to let our money grow for at least six to ten years. The simple logic here is that the more time we give to an investment, the more chances of us earning a large profit increases. Look at it from a positive viewpoint – if the company doesn’t do well in two-three years, it doesn’t mean it will lag for the rest of the time. It’s like a leap of faith where you’ve to trust the other person, in this case, the investment.
#4 – Be strong enough to walk away from your investments
Douglass says investors must be able to walk away from their investments. Though it’s hard to ignore something which has taken up so much of your time and effort, it’s also important. If you don’t move away from the wrong investments at the correct time, your other investments will be left behind. So be smart and play carefully.
Wrapping it up
Hoping that you’ve gone through the tips, we would be more than welcome for you to get back to us at any point. If you find something complicated, we’ll always be available to help you. So don’t feel shy, and jump into your future endeavors with confidence.