Investing Decisions - Deepstash

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Always Protect The Downside - Darius Foroux

Investing Decisions

Invest in something that has an underlying value.

Limit your potential losses by diversifying. For instance, invest in an index fund, real estate, and business.

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SIMILAR ARTICLES & IDEAS:

Investing

... is the trading of your money today for a lot more money in the future. It is a high yield over the long term.

What happens to your money

Banks don’t like to give away their money. That mindset is reflected in the interest rates of checking and savings accounts of 0,5% and 0.9% avg. annual interest respectively.

When you deposit your money in the bank, the bank turns around and invests that money at 7% a year or more. After they collect their profit, they give a tiny shaving of it to you.

Portfolio and Diversification
  • Your portfolio reflects your long-term wealth building investment strategy – not the short term. It includes everything you own. Your retirement accounts, your investment accounts, even your home are types of investments.
  • Diversification is a way to describe owning multiple types of investment assets. Diversification is smart because you both protect yourself from failure and position yourself to take advantage of multiple robust methods for building wealth.
Extrapolating our thoughts

A few examples of how we extrapolate our exceptions all the time:

  • “House prices will probably keep increasing.”
  • “That person will never change.”
  • “My business will keep growing.”
  • “I will never learn from my mistakes.”
  • “He doesn’t like me.”

The root of this problem is our quick judgment.

We’re fast thinkers

But that doesn’t mean we should follow through on every single thought that pops into our mind.

Every time you start thinking about future events or start making mental movies, keep count on a post-it note or a small piece of paper. Be aware of your thoughts. But don’t follow through.

Ryan Holiday
Ryan Holiday
“It takes skill and discipline to bat away the pests of bad perceptions, to separate reliable signals from deceptive ones, to filter out prejudice, expectation, and fear.”
Four Steps To Building Wealth
Four Steps To Building Wealth
  1. Don’t Be a Consumerist: keep your expenses as low as possible without sacrificing the quality of life. Spend money on things that yield lasting benefits.
  2. Have An Emergency Fund: this gives you freedom and peace of mind to deal with issues without having to upset your long-term investments.
  3. Invest Defensively: investing in individual stocks is a dangerous business and it can take your peace of mind. Index funds let you invest in a whole group of companies, bonds, etc. without the time and risk involved in individual stocks.
  4. Diversify Income: relying on a single source of income is a dangerous strategy. Multiple sources will make you more financially resilient and give you the resources to acquire assets and invest.