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3 Critical Things to Keep in Mind When Investing

Investing your hard-earned money can be a little intimidating. After all, it can be difficult to predict market fluctuations and crashes, and even the pros don’t get it right all the time. Yet, some investing advice doesn’t change with time or the volatile markets. Here are 3 critical things to keep in mind when investing.

1. Invest in Yourself

Warren Buffett, one of the most successful investors in the world once said, “The best investment you can make is in your own abilities. Anything you can do to develop your own abilities or business is likely to be more productive.” According to Buffett, an investment in self applies to improving communication skills and enhancing your unique talents. But, it also means strengthening weaknesses, which he says will result in a more rewarding life. The idea of investing in yourself first might seem overly simple and even Pollyannaish, but making improvements in your personal life can spill over into other areas, including your business and investment dealings. And, if all other investments fail, you and your career will make it through the tough times.

2. Be Modest

Many of the most successful investors share a common and underpublicized trait: they are smart with their money and modest in their expenditures. It might sound too simple to take seriously, but if you spend more money than your investments make, you’re eventually going to be broke. Once you’ve made some money through your investments, diversify carefully and be modest in your spending – that’s the secret to financial peace of mind and the accumulation of wealth.

3. Don’t Overreact

Careful, considered investing involves a fair amount of patience. Investors who make knee-jerk reactions based on the slightest hint of negative news aren’t always looking at the entire picture. When you invest in a company, do a little homework to determine whether that company is worth a long-term investment and will grow in value over time. Buffett, himself, believes in this long-term, considered approach to investing. His philosophy: patient investors will be rewarded in the long run, especially if you do your homework up front and invest in the right businesses.

 

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