Investment Objectives: Having an investment aim and objective determines how much you intend to succeed or profit into any kind of investment you venture into. This could be summed up as your reason for investing. You have to make extensive research into the areas of specific business.Having a detail feasibility study into the area of business investment keep you focus as to the capital to be employed in investment, net present values, payback period, anticipated risk factors, etc. without understanding why you are taking the decision to invest, you may not know for how long to hold such an invest mentor when you have achieved your aim. If it is a particular field of business you’ve chosen to invest. Do you have the needed knowledge or experience? It is important to have a basic knowledge in the field of business you want to make investment by reading books and articles concerning the investment. No matter how many books you have read or seminars you have attended on investment, you cannot say you have learnt the nitty-gritty; at best you only possess limited knowledge until you are involved in actual investing. For a beginner investor, it is necessary to read books and gain fundamental knowledge before engaging in any type of investment. The experienced investor still has room for improvement by utilizing the feedback from both profitable and not so profitable investments to refine his or her investment style and methods
Investment Principles: For you to succeed in any investment, be it stocks, real estate, Forex, mutual funds, commodities etc, there are needs to have investment principles or you could call it investment style. It also includes how long you hold any investment. Your style of investment is largely determined by your investment goals, knowledge and experience. Your style helps you make decisions on opening and closing deals, which instrument to invest in, when and how much. The most important factor in your style is your method of analysis, there are fundamental and technical analysis for investments, generally the best analysis involves a good blending of the two methods of analysis based on your investment goal. Instruments are your investment tools or vehicles. They are the things you invest in, such as stocks, indexes, funds, real estate, commodities etc. To be a successful investor you should have a broad knowledge of investment instruments because no instrument can be said to be the best on a general basis. The successful investor having this knowledge allocates funds to different instruments at any given time based on analysis, knowledge, and experience and market trend.
Disciple/Psychology: There is need for you as an investor to exercise good discipline in stating your investment goal, keeping your emotions under control, acquiring the required knowledge and experience, building an investment style and sticking to it, identifying the right instrument and allocating adequate funds at the appropriate time. The game of investment is not played with emotions. It is a known fact that every market in the world is ruled by the emotions of greed and fear. Most losses encountered in investments result from these two emotions. People have lost fortunes they made as a result of holding on to an appreciating investment, believing that it would keep going up (greed) only to watch it go down and sell off due to fear when the capital would have been almost wiped out. This also involves solid money management techniques without which any gains made could easily be wiped out. In fact, developing strong discipline in the art of investment is half way towards succeeding. To be a successful investor, you have to build your income streams and cut down your expenses. In other words you should have a high income/expenditure ratio. Before spending money on anything consider the following: Do you really need the item? Are there cheaper and even better alternatives? Can you wait a little longer before acquiring the item? Remember, one of the success secrets of self made millionaires is delayed gratification. Always look out for ways and means of creating multiple streams of income. Above all, cultivate the habit of saving at least 20% of your income, by so doing you will have funds for investment purposes. This also involves solid money management techniques without which any gains made could easily be wiped out. In fact, developing strong discipline in the art of investment is half way towards succeeding. Never allow your emotion to have an upper hand in any investment you undertake. Aim at having a detached view of any investment you make, that is the successful investor’s mindset.