Photo by Precondo CA on Unsplash

Twelve (Irrefutable) Principles of Investing

Financial literacy is not something that’s taught in school. Thus, most of us simply learn proper money management from our parents, family, and friends. However, those are sometimes not enough to help us become financially successful and eventually to become financially free and independent.

Let me share with you the 12 Irrefutable Principles of Investing, and why it’s important to remember them especially during this uncertain times.

An investment is a commitment of funds made with an expectation of a positive rate of return.

Simply put, an investment will make you money. This seems common sense, but I’ve met people buying condominiums where they don’t have plans of selling for profit, nor do they have plans of having it rented out.

Those purchases are not investments, they are simply assets.

Start early.

sliced mangoes served on white ceramic plate

Time is on your side and it becomes your ally when you start investing early. Just read this story of Mr. Invest Now, Mr. Catch Up and Mr. Wait Longer.

There is no such thing as “the best investment instrument”.

Just like musical instruments, it’s silly to compare each one and say which one is the best. That would always depend on the person and their musical preferrence.

In investing, every person has their own financial goals, and the best investment instrument for them will be the one that will help them achieve those personal goals; and what’s best for them may not be the best for you or me.

The higher the risk, the higher the return and vice versa.

It pays to know this principle because it will help you avoid investment scams. When someone is offering you a low-risk investment with high returns, it would be prudent to turn around and walk away from them.

Do not invest in anything you don’t understand.

A car, a motorcycle, an airplane, a tractor — you will not drive or operate these unless you know how. Or else, you risk getting into an accident or worse, dying.

Investments are also called “investment vehicles” and it’s the same — don’t put your money on something that you don’t understand, or you risk making a mistake and losing money.

History always repeats itself. People seldom learn.

Human behavior and emotions play a big factor in moving markets and economies. While each individual is different, we collectively exhibit repetitive behaviors and reactions to things that happen around us.

This results to market patterns that repeat over time. That’s why it’s important to learn from the past, if we are to prepare for the future.

Prices will inevitably follow value.

Companies in the stock market are businesses. And successful businesses are those who consistently bring value to their customers.

Stock prices may go up and down, but if the business behind it continuously makes money, then people will want to be part of it, even if it means buying up to purchase their shares.

The majority is more often wrong than right.

Just because a lot of people are saying it, doesn’t mean it’s immediately true or valid. It’s always more important to check the credibility of the source and the objective validity of the information.

This is the reason why fake news proliferate in social media, because people assume an article is true just because a lot of people are sharing it, so they immediately treat it as truth and share it themselves.

No one ever lost money by selling at a profit.

Imagine that you bought a company at 10 per share. And you’re hoping to sell the stock when it reached your target price of 50.

After a year, the stock suddenly went up and reached 45 per share. And people are saying that it will continue to go up and reach 60 per share. But there’s also some people who are now saying that the price would soon eventually start to go down.

What would you do? Are you going to hold and wait for 50? Or are you going to sell now and take profits?

The principle says that you should sell. Because markets are unpredictable, and getting 90% of your target is already a good win for your portfolio. What’s important is you made money now, because you can always find another opportunity to earn the remaining 10%.

If you always focus on the bad decisions you’ve already made, you will never be happy.

We all make mistakes, and what’s important is we learn from them. Whatever money that you lose in investing, think of it as the tuition you paid to learn how to properly do it next time.

Accepting your mistakes and moving forward, while equipped with new learnings, is a good way to find success and happiness in the future.

Volatility can be your friend if you know what you are doing.

smartphone on brown wooden surface

There will always be hard times and good times. Prices will always go up and down. And if you know how to navigate through the volatility, then you will certainly make money.

You don’t even have to know much about timing the market, as there are strategies like peso cost averaging, that can help increase your profits after periods of recession and depression.

You can never control the weather, but you can control the ship.

ship helm

We don’t have control over the global economy nor the national economy. However, we do have control over our personal economy. So it’s best to focus on what you can control.

Instead of worrying about the recession or being afraid of the falling stock prices; use your time and focus your energy on managing your investments, creating multiple sources of income, and increasing your financial literacy.

About the author

Bitshares Labs contributes content pertaining to various topics and development updates about the Bitshares Ecosystem and Blockchain Technology.

Comments

  1. you are the captain of your ship…sink or sail it’s up to you!! you can guide your ship to open waters dodging the icebergs or let it go on autopilot and take your chances. If you don’t think your ship can sink, maybe you should talk to those on the Titanic.

    1. Twelve Great Principle of Investing which I will need to read over and over again and still though they seem very sound, I realize there are so many nuances that could hang us up. Thus, one lesson I have learned over the years, is to never be afraid to ask for help, and now I am the Queen of doing so, haha This is a huge task (investing) and is not something readily available to the average person from my generation. So for me, very happy to be with a group of people who care for each other and want everyone to be successful – those are the type of people, I feel we can learn from!

  2. Great information for us to keep in mind as we grow as Compumatrix members. It is definitely information that we should pay attention to!

    1. I like this one: The majority is more often wrong than right.

      It is not always smart to always just do what most of what eveyone else is doing. The majority is not always right. It is always smart to KNOW ENOUGH so that you can acces kis the data appropriately, or go to someone who has a good success rate for advice. Failing to do either or both of these can result in the investor loosing their shirt.

      Of course,most do not learn this lesson until they already have lost $$$!

  3. Very good information, most average people invest for short term gains, long term goals need to be set and take some short term gains as well if required. Don’t invest with your emotions guiding you, knowledge is king and it minimizes the risks.

    1. Short term investments to become millionaires do not work. We, each one of us has to look at a long term investment. Small withdrawals along the way, whilst leaving the bulk to accumulate.

  4. Some profit is better than no profit. Try not to be moved by the market but by the the time You have put in to learn about the investment. Take the Time to educate yourself to feel confident In moving forward in the investment and just go for it.

  5. This is great advice, especially for younger people to get started investing now for their retirement. I, for one, made the mistake of having the mindset that I would start investing “later.” I kept putting it off for way too long. Looking back I realize that I should have forced myself to make some sound investments. Just a little from each paycheck would have built up to something meaningful in the long run. But I was too focused on immediate satisfaction instead of looking ahead.

    I hope that others who read this valuable information really take it to heart. Your future is something that you need to take care of now, not later.

  6. It’s important to understand the fundamentals of the correct way to invest and how to approach this area in our lives. The 12 points outlined in this blog gives sound advice of what we should all look for and understand when it comes to the various types of investments available to us. The story for the 3 friends and how they approached the same investment and when they entered and how long they stayed, is a good lesson of how important compounding works and making sound decisions when making the commitment to invest. Compumatrix is a platform that will provide a number of avenues for investing and participating and working within the system and will give us all a sound grounding for our financial futures.

  7. the 12 points of investing makes very good reading. and I have read it a couple of times
    you have to do your own research and never be led by someone elses word of mouth alone
    This time in history is so uncertain as far as investing is concerned,
    But I do believe we at compumatrix moving forward
    have the best program and members and the right people at the helm
    and after that it is up to all of us as individuals how we succeed.

  8. Great advice and lots of good information!
    I would also like to add that quality businesses earn high returns and increase in value over time.
    Time is a friend of the business.
    Fundamentals can take years to impact a stock’s price, and only patient investors will be rewarded.

  9. Sound advice. Advice I wish I had access to 10 years ago. I tried the long term investing and the short term and I lost my boots in both. Even with the help of so called skilled investor help I landed up losing my life savings. So yeah. No more putting all my eggs in one basket!

  10. I really liked this post, but I believe that everything should follow a cycle as if it were a PDCA (Plan, Do, Check and Act). Before deciding to study a technique for investing, it is necessary to define a plan in detail.

    This planning deals with internal aspects, that is, what are your current financial conditions, your behavioral profile to deal with the market and helps to identify points for improvement.

    It is estimated that an Investor who uses well-structured financial planning before making his decisions will be able to increase the yields of his investments by at least 30%.

    So, before Do, Check and Act, invest a lot of time in Plan and build a solid base to support your decisions.

  11. This is such a great read, and really easy for those new to this. So looking forward to using this great advise.

  12. If only we were taught the value of how to use our money from a very young age, the world would look very different today. Yet with new decentralized ecosystems like Compumatrix, leading the way, we get a chance for a do over. Let’s teach our children, our families/friends, and our communities well this time. It’s time to level the playing field for all.

    1. I agree, I wish there were more sound classes being taught about money, finances and investing in high schools and are required classes to graduate. I believe it would help them feel more confident going into the new world since they would already have a base understanding. They would be able to maybe advance their careers with the knowledge that was taught early on.

  13. Investments are the best way to to about, earning safely. Only if these are done very carefully. We are in difficult times now and this kind of PASSIVE INCOME would be the best option, without any doubt. Spreading the risk by investing into several places, would give us more security as well.

  14. Great information and very good advice.
    Longtime investments are always good and more solid then short term.

  15. I compare this post on the 5G with the industrial revolution and the beginning of many positive changes for society, including amazing medical improvements, and many military and social benefits.The company that created the semiconductor holds the key to success with this product in my opinion. I understand the 5G at present is only “line of sight” without this semiconductor, meaning that if you step inside a building you will loose the benefits of 5G. If you had to build towers across the planet it would not only take years, but cost billions of dollars. This product will not only allow for greater advances in communication, but many many other real life benefits for society in health a safety.Looking forward to being a part of this new revolution in technology. A gigantic thank you to our engineers and scientist.

  16. Twelve (irrefutable) principles of investing defines what is investment. It also tells us the difference between investment and assets. This blog by CBN staff also shows how an investment makes money while an asset may not earn you any money to pay your bills. It also shows how if the returns are higher so are the risks.

  17. Investments are a way to begin to earn in a somewhat passive manner. Put your money up and wait (hope) the asset gains in value. Higher returns the better the reward. Some very good ideas on this post.

    Many people could stand to incorporate the points above into their investment procedure.

  18. Investing usually has two approaches: 1. Investing with self judgement and 2. Taking professional help for investing. Both approaches of investing leads to one goal, and that is highest Return On Investment (ROI). There are many areas where one can invest and gain or lose their investment. My personal choice on investment is on Real Estate, where the prices have not reached the saturation stage. When I intend to invest, as it is going to be my money, I would prefer to invest as per my choice. The ROI on Real Estate is much more than any other investment.

  19. Investment is an art that has to be learned. There are those who find investing or trading comes naturally to them. Other,like myself struggle with both. I agree that it would be better to take the 90% and search for the other 10% in another area. I have lost at both trading and investing, and never seem to be able to “cashout” at the right moment. For this reason, I prefer to do neither but keep my cash safe in a bank. No profit, but no loss.

  20. I like the information in this post and I will read it over again a few times later, so it can sink in better for me. I laughed when I read “No one ever lost money by selling at a profit.” That is so true though and is right up there with the old adage referring to a sure way to make money, “Buy low and sell high”.

  21. Oh, if only I was mindful about the value of savings and investments, or was constantly around people who were into this undertaking when I was in the prime of my life, I would have been financially secure even before I availed myself of early retirement. I learned my lessons the hard way. This is a very good read I intend to share this to my children.

  22. “The majority is more often wrong than right.” Interestingly, I just gave my 16 year old a bit of money to learn the stock market. She bought American Airlines and all the new yesterday was about just how horrible it was and how it might go bankrupt – today it is up about 25% on reorg. So . . . “blood on the streets is often the time to buy.”

  23. “The higher the risk, the higher the return and vice versa.” that is important topic, there is no high yields without risks, you find someone offering this kind of deal take care, it probably a scam.

  24. I really enjoyed this Blog. These 12 Principles will be posted in my notes.
    Compumatrix has taught me a lot over the past decade. Undoubtable Patience is one of thee Best
    qualities I’ve learned. In the Act of being patience I have had the opportunity to watch and learn some
    about how the markets fluctuates, which with patiences can/has offer a nice profit return on my Investments.

  25. I believe if we start with our children at a very young age to teach them about finances it is more beneficial to them when reaching adulthood. It shows the child how to plan ahead making them feel more in control of their own future. Starting with a piggy bank and then opening a junior savings account children take that first initial step toward learning how to save money for investing in stocks, bonds, and of course cryptocurrencies!

  26. This is a very good and important read and really these Principles should be taught in schools to be part of general knowledge.
    Agree with Laurie that actually it’s good to start with young children..with their weekly or monthly pocket money they learn how to manage funds short or long term and build on that.

  27. These are very important and comprehensive principles of investing. Practicing these principles will take deliberation, discipline and self control. However to become financially independent we have to persevere and master them. Knowledge, self discipline, consistency and perseverance will win the day. Starting early and not being overcome by failure and negative experiences will usually bring success.

  28. Don’t focus on the negative as it will only bring you down . Learn from the negative and move forward so as not to make the same mistake twice. Grow from the negative and you will be able to help someone who might be going through the same problem that you went through.

  29. There are thousands of stories about people who end up broke after loosing all their savings, investments, inheritance and good fortune if you happened to win the lottery.
    Recently, I read other people’s stories who have been with the same experience as mine and in their golden years find themselves trying to survive and invest in what could be their last chance.
    I consider ignorance and greed the biggest factors in mismanging money. Most people who build up wealth with time through hard work, are careful and find ways to save it and invest wisely, they usually find themselves associated with business people who have learned from other’s experiences and know things to avoid and specially are disciplined and have great respect how they treat money. That doesn’t mean you can still lose your life’s work savings or furtune, but generally speaking, it is a good fundation. I also believe the biggest trick when you find yourself with wealth is to seek quick ways to double, triple or grow your money into millions; that’s a sure way to lose it fast. Gradually and methodically find a way to keep what you have and only invest in solid investments such as real estate, gold and if you can, invest in conservative growth. In my opnion, the worst personality traits are being impulsive and emotionally impatient, the best qualities are discipline and a desire to listen and learn.

  30. With the changing norms of our society now with the lockdowns all over the world, it seems that there is an opportunity every time you open your email or read the news. I received an email from a very well known blockchain wallet/exchange offering interest bearing accounts. If you invest your Bitcoin with them they will give you 4.5% interest annualised. They sound just like a bank. There is a business online who have been going for just over 1 year now. They use Bitcoin as a base currency and trade the 28 Forex pairs from Monday to Friday with an artificial intelligence (Bot) who has never had a negative trading day since its inception. It trades between 200 and 1000 small trades daily. (No human can do that) and the daily profits are added to the member’s trading pool daily and compounded. Now, Einstein said that compounding is the 8th wonder of the world. And he was right. From September 2019 to April 2020 (8 months) the profit made by the members was 141.76% or 0.5334% per day. Now that is a decent investment!

    1. This was a nice review of some pretty important concepts in the realm I’m investing. However one that they don’t mention as much and that I hold near and dear to my heart both in the equities and the crypto market is the power of dollar cost averaging or what we in the crypto space call hodling! The aspect and guarantee of hitting every high and every low has been the most important aspect of my portfolio for over 20 years. As we are still in the mid to short term range of the crypto cycle, I am looking forward in seeing what the benefits of hdling will look like in the years to come. It will be hard to figure out when we in the crypto space need to take profits if we are subscribed to hdling as opposed to traditional trading and taking profits at the 90% goal. Hopefully 2020 and 21 will make for growth opportunity markets in both equities and within crypto. However I am afraid of the significant quantitative easing that is going on with trillions of dollars being dumped into the US market that are equity brothers may not do as well for the short term.

  31. Those are excellent things to seriously consider when investing in anything! I’m particularly impressed with the advice to be prudent when taking “sell when” advice from anyone; and instead sell when you have made a decent profit ( don’t be greedy or stupid). Happily, I’ve personally managed to use my distaste for gambling in avoiding most of inevitable scammers who promise too-high returns.

  32. My personal thoughts on this article ”
    Twelve (Irrefutable) Principles of Investing
    is a follows:

    The above article makes a lot of sense and are good principles to follow in most financial and business decisions. I might add another thought when it comes to buying stock as an investment.. Why not consider investing in a Royalty Company at a good price, such as a gold stock royalty company.It could be a very successful investment without worry about the potential mining and equipment problems. One might seriously consider this approach as alternative to actual stock investing.There are many great Royalty companies to choose from while using many of the 12 principles of investing as a guide.

  33. I absolutely love the concept if you do not understand how to drive an actual vehicle in hopes that it will just come to you; then how could you possibly invest, trade, or make any profits in these areas with no knowledge what so ever. How ever it is made obvious that investments are done in order to gain more than you invested in the first place and so one should have an idea of what value their investment has, which means doing so research and home work on your investments. What was refreshing is the idea of not getting too greedy, that if you chose a mark of a profit margin, and it came right up to that mark, and hesitated, then be on top of your game and make a move, for too long of a hesitation could cost you in the long run. But, then some investors would say be safe, and take the long run approach, and there is much to be said for holding as long as you have reached your plateau in your portfolio. But once again one must know what it is they want out of their investments before they start.

  34. Everyone who decides to jump into a business must love and understand the business in all areas. Just because it seems like the best thing since sliced bread does not mean that it is the best. The wait and see mentality may bite later. Learning from past experiences helps in making a decision when it presents itself. One thing I have learned over the years is not to over-analyze an opportunity because procrastination has proved to be a big mistake more than once. Going with a gut instinct and not jumping into a too good to be true “opportunity” is usually just that too good to be true. As stated on this blog, dwelling on a mistake will only hinder future successes. One of my rules is never to go into anything I can’t afford to lose.

  35. Thanks! Great points. All make good sense. I have two teenagers, and I was thankful that our state added a course in financial literacy to our high school curriculum. My oldest, had a great teacher. He made it into a game. She loved it and figured out how to live in NYC, rent an apartment, buy a car and invest money with the income she was assigned. They learned some of the basics like balancing a checkbook, writing checks, paying bills etc. But during the investment part, they had an online dashboard where they were able to “purchase” stocks. She was scared. And since we haven’t truly experienced success with stocks we weren’t a lot of help. But she did make her purchases and got to watch her portfolio over the course of the last couple of weeks of the class. It was great learning, but too short for them each to see the real power of investments. Financial literacy is definitely needed in our schools — from early ages and taught over and over again. And hopefully, along the way there is a GREAT teacher!!

  36. just an awesome and truthful article and so many wonderful replies and ideas to expound on I will be studying this article for many days to come and hoping that others will also and add to the information here –it is such a good place to learn on how to invest and cover yourself and do it wisely — thank you very much —

  37. I am reading and studying and researching more and more and getting a much better understanding on how to set myself up for success which ultimately is what all of us wants when we go invest or go into business or pretty much just go day to day we want to Succeed—- thanks again great read–

  38. Financial literacy is so important and I wish it were taught in our schools; it certainly wasn’t taught in mine. This article, “The Twelve (Irrefutable) Principles of Investing” is an excellent article and everyone would be very prudent to read it again and again and then teach it to their children. Even today a friend is urging me to make an investment with guess what very little investment money and sky-high returns. I so want to do it; thankfully this article keeps me grounded; I researched the company and up popped lots of red flags but I still want to do it; (but I won’t) “Never invest more than you can afford to lose” is excellent advice and was echoed by one of our leaders. The wait and see approach has been ingrained in most of my friends but I don’t think that’s the right approach. Let’s be real, I’m not sure its wise to look for the no-risk approach either. Waiting for money to fall from the sky without any risk or activity is like doing the same thing day after day and then expecting different results in your life five years later. Excellent article for all of us.

  39. I am working from home again and learning from some very talented individuals and groups of great People here and this article when read more than once and understood more and more is truly very helpful here and in Life in general as we grow wiser hopefully and as spend more thoughts on being wise and not spending all our thoughts on the wrong choices made — Life is a much more smileable situation — great read again and again

  40. I really liked this article and I liked this advice even more: “Accepting your mistakes and moving on, although equipped with new learnings, is a good way to find success and happiness in the future.” It is an excellent advice not only to apply in the financial, investment area, but to apply IN LIFE !!! When we recognize our mistakes and seek to learn from them, they become great allies in our spiritual and material development. Hugs to all!

  41. I just read and posted on a couple of the newer blogs on great postings and it led me back to this blog posting and re-reading this blog again and putting the 2 with this one and studying from I believe is an awesome way to further the understandings of our business here and it helps also in everyday life in my humble opinion — thank you

  42. A very important skill to take away in investing is research, research, research, research! I have many friends who are getting into the various stock market apps, and they have no idea about market fundamentals, tax consequences, investment tools, etc. I have a background in Finance so they’ve reached out time to time to learn. Many of them have accidentally taken positions on margins, bought call options without knowing how a call works. This is dangerous and reckless. Get in the game, but learn what you are doing, and if you don’t know reach out to a professional or someone you trust, and as they say, never invest what you can’t afford to lose!

  43. Investing can be very complex, but as for the basic investing strategies – anyone can understand if they put in enough effort. Although I love these twelve principles of investing, I think reading books to grow one’s knowledge about investing is crucial for anyone’s success. Two of my favorite books are “The Millionaire Next Door” and “Rich Dad Poor Dad”. I also really enjoy listening to podcasts by Dave Ramsey and Suze Orman. Money can either be your best friend or your worst enemy – I think it is up to the individual to decide what money is going to be to them. Money will work for you (by investing) or against you (by not investing, spending, and “bad” debt).

  44. holy cow not just remembering Harry Caray — the Cardinals or the Cubs announcer but so much truth in research research and listening to Dave Ramsey — wow or holy cow lol – as we grow in the crypto world of investing and also in the private world of Bettering ourselves — I think we just keep learning and growing and we also hold hope not just in our back pocket but also in our Thoughts n also our Hearts — rjh

  45. so very true Steven — there are many people who are trying to be out front in so many of these newer or new avenues of the business world and — wow it is a very sad story when people put all they have into something they don’t know or understand — i worked thru so much of that offline in the food industry –so many pour life savings into food business and in a year have nothing but they just jumped in and didn’t take time to hire professional help or take time to learn before they spent it all — learn learn learn be patient and then work/invest Smart _– rj

  46. I had to come back and read this again and read the replies so much great info here but after reading the last 5-6 new blogs a couple times and then you just have to come back and group this and a few other blogs into the understanding of what we as Whole here at Compumatrix and Henry’s Vision for success are working at accomplishing — it is awesome imho

  47. I keep re reading the blogs too. When your tme is limited it is not so easy to concentrate on what it actually says. So it is usually on the 3rd or 4th reading that it sinks in for me. It is awesome that some people have the time and are willing to put blogs up for those that are happy to learn and those that have time to comment.

  48. So many things can go wrong in life, but if one sticks to these twelve principles; they will be way better off than most people. I know for a fact that many people read multiple books to try and find information like the information provided in this blog post, but yet never get this much information. Thank you for compiling this useful information!

  49. oh it is just such a good thing for me to come back and read these blogs again — they are so informative and the replies add so much more to the reading and being in a position that I need to learn and learn a bunch — these blogs are so helpful and I am so very appreciative of the effort and time put into these blogs by the folks here — it is so good really — thank you —

  50. as the learning continues –the truths of these 12 principles stay fixed in the construction of success — not just here at Compumatrix but also in so many other facets in Life in general — time and life has taught me that most all of the good learning in any one facet is also very well absorbed into other facets of our existence and If and its a Big If — we want success then utilizing each part of this blog with other parts will ultimately bring Victory –in my opinion — great stuff here —

  51. do know this much also never learned without taking time to read or listen now to different parts of each avenue — i read and learn others do different ways but here is simple facts — let go of the mistakes of the past and keep pushing correctly towards your wants needs goals — but reading here is an awesome step by step to help lead me in that correct direction — thank you

  52. Great to read twelve (Irrefutable) Principles of Investing.  A lot can be learned by reading it over and over again.In the past we made mistakes investing our funds.we can adopt these twelve rules benefits and profit in future.Thank you Bitshares Labs.

  53. That is 12 great points and as the old saying goes, don’t put all your chickens in one basket it is always better to diversify that way if you do lose on one investment you do have others to fall back on. I remember a guy that was going to retire in a week and the recession hit, well he had 300k in his 401k and after the recession, he had 30 dollars, talk about a slug in the gut this guy was devastated and said he would have to work now without retirement.

  54. such a good read and with the newer postings in the blog area reading those and coming back and putting this with those it is a great lesson to be added to my biz thoughts — I appreciate so much the efforts and time folks here put in to post in this Blog area –great usable info —

Leave a Reply

Your email address will not be published. Required fields are marked *