2 Quick Rules.

How To Turn Your Investment Into a Fortune.

  1. UNDERSTAND WHAT YOU ARE INVESTING IN: The first rule of investment is that you understand what you are investing in. The business must be one which you have an interest in. Many investors make the mistake of looking only at the financial prospect of a business without understanding the basic workings of the business. While it is good to look at business plans and study financials, you must take out time to research and make adequate findings from industry professionals about the obvious merits and unknown demerits of the business. Once a guy came to me smarting with excitement about wanting to begin commercial transportation business. A name had even been reserved at the Corporate Affairs Commission. What he had not done however was to make adequate findings from people who are already in the business. When I took him out to interview those in the business, he discovered some of his earlier projections were wrong.
  2. NEVER INVEST MONEY YOU CANNOT AFFORD TO LOSE: The second rule of investing is that you should never invest any money you cannot afford to lose. Investment is a risky venture. That’s the plain truth. Investment is like a prayer; you are putting money or asset into something with the faith that such venture will yield a higher turnover. But what if it fails, have you ever considered that? What if you take out a loan mixed with your life savings and plunge them into transportation business, for instance, and the vehicle is involved in ghastly accident beyond repairs. What would you do? We often don’t look at the downside of things. But good investor knows that even though he has to take risks, testing the water with both feet could sink him. The point here is that you should always think like the Medici: think big but build small. Create something you are proud of but don’t let it swallow you up financially.
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