The secret of investing money is that there’s no secret. When we boil down the fundamentals of investing, we pretty much figure out that it is a wealth-creation process. And just like every wealth creation process, there are no secret recipes that can make you a millionaire overnight. In fact, anybody in the investment space will vouch for the fact if you invest with the mindset of miracles happening, you’d be disappointed in almost every case.

Achieving success as an investor requires a lot of time and experience. More importantly, it requires you to understand the basic market and put your money in promising places. Investing is a long-term process where profits and losses are just a part of the process.

The Paradox of Investing Secrets

Most people that enter the investing market enter with the mindset that they would make a tidy profit. While being hopeful is great, truth is, inadequate investing knowledge might hurt your portfolio a long way. Many new investors still pursue investing as some sort of “get rich quick” scheme. It’s a common misconception that if you have a thriving investing portfolio, you might have got your hands on some investing secrets that nobody else knows about. Sadly, the truth is that there’s no secret of investing that’s keeping you from immense riches.

If you are an investor or planning to start investing, one thing’s for certain - Anybody who tells you they have the secret of investing and making riches, probably has no idea what they’re talking about. Investing is like every method of making money. You either make a profit or you face losses. There’s no certainty. However, there’s preparation, and that preparation is what we will be discussing in this post.

The Fundamentals of Investing

Investing fundamentally introduces you to financial discipline. The financial market has evolved a lot since the pandemic. Currently, the volatility is high and the economy is uncertain, yet investing your money still is a good idea rather than keeping it saved just to lose its value due to inflation.

Before we move to what experts consider the secrets of investing, it’s important to remember:

• While the markets may be uncertain at times, long-time investors are always closer to their investing goals

• Invest your money in markets that you feel comfortable in

• Don’t invest just because of the fear of missing out.

• Set goals with your investments.

To help you make the most of your investments, we have laid a few important fundamentals to benefit your portfolio in the long run.

Secret of Investing #1. Start with a Plan

• It’s a no-brainer that every investor wants to make money. But the most important question to ask yourself is - “What do I want from my investments?”

• Your investments could be in the short-term like buying yourself a car, or they could be in the long-term, like saving your money for retirement.

• As soon as you know what you want with your money, the next step is to constantly review your goals. A few months into your investments, you’d easily be able to figure out if you are going in the right direction or not.

• Most investors make the mistake of investing in markets that are either new or highly volatile. Because of this, uncertainty always lingers about how the markets would treat your investments.

• Take advantage of stocks and bonds for long-term investments. Take note of how your investments are performing and invest in markets and securities that have been around for a long time.

Secret of Investing #2. Start Saving Early

The key to growing wealth is investing in your early years of life. The earlier you start your investing journey in your life, the better of a headstart you will get towards reaching your financial goals.

Most times, the problem lies with the lack of knowledge about the investment sector.

At a time when even students can start investing, we usually see people starting their investing journey towards their late 20s or early 30s. This practically causes a rift between your savings and your goals.

Saving early allows you to:

• Save more money for your retirement (or other goals)

• Becoming financially disciplined from your early years

• Save funds even for rainy days

• Understand the financial markets and securities better

• Become proficient in the stock market and other securities.

• There’s never a better time to start investing than today. The earlier you start, the more benefits you will reap.

Secret of Investing #3. Start Investing in Autopilot

When you invest uncalculated amounts based on how much you can afford, your portfolio takes a hit. Investing in irregular amounts not only is a bad investing practice, but you also don’t potentially enter the markets at the right time.

Most importantly, there are often uncertainties that keep you from investing in a particular month. Maybe the bills were more than usual or you overspent on a vacation you went on with your family.

To deal with this problem, one of the best methods is to invest your money on autopilot. Investing on autopilot allows you to invest a fixed amount of money every month which directly contributes to your financial goals. Whether this amount is going from your monthly salary or from your business income, you can always keep an amount for investments that are untouchable by any means.

One of the best ways to do so is by investing in mutual funds and starting a monthly SIP. By this method, a fixed amount of money every month would be deducted automatically from your account and will be reflected in your portfolio.

Secret of Investing #4. Keep the Costs Low by Managing Your Investments Yourself

Investing could incur costs. Be it in the form of redeeming your funds, entering into global markets, or brokerage fees, you might have to pay extra at times for a broker to manage your portfolio.

When you switch roles and run your portfolio yourself rather than an outside manager, you already have eliminated the account management charges. In the same way, when you use the right investing platforms that allow you to open your account for free, you save on money again.

However, as appealing as it sounds, it also gets slightly difficult to monitor your investments and their performance. Not only is it a job that requires skill but it also has a relatively higher risk than usual.

That’s why if you are planning to manage all your investments yourself, the best way is to understand the fundamentals of investing properly and only then taking informed decisions on your investments.

Secret of Investing #5. Diversify Your Portfolio

Being all invested in just one place doesn’t make sense in the long term.

As you start your investment journey, choosing what kind of a portfolio you want to create impacts your returns a lot.

Diversifying your portfolio means allocating your capital into a variety of assets and securities. A diversified portfolio consists of a variety of investments into different markets depending on the preference of the investor.

Diversification not only saves your money from volatility but also opens doors to profit from different investments. This positively impacts your Return on Investment (ROI). It also introduces you to benefits like:

• Lower risks - In case one of the investments start underperforming, the rest of your investments won’t be impacted.

• More profiting opportunities - Because of your investments in different places, you have more opportunities of bringing a profit.

• Long-term approach - Diversification is a long-term approach. When investments are made for longer periods of time, they essentially have more chances of bringing returns than short-term ones.

Secret of Investing #6. Avoid Traps That Make You Chase ‘Performance’

One of the biggest problems investors usually face is falling into the trap of recency bias. Because of recency bias, investors usually chase the next big thing just based on how the markets have performed recently.

This means that if a market has brought profit to the investors suddenly, most investors would invest in that market again, thinking they can also profit off those returns.

However, in almost all cases, that doesn’t happen at all. Jumping into the bull markets and continuing an upward trend with the same isn’t as easy as it seems. Most likely, the future of the funds’ performance will return to average over time.

It’s true that skyrocketing bullish markets seem appealing and you’d want to get a piece of the pie. But in most cases, a recency bias is going to hurt more than it’s going to profit. To make the most of your investments, it’s important to stay invested in the long run and not be distracted by the ongoing trends that are more hurtful than they are profitable to you.

Secret of Investing #7. Withdraw Responsibly

Withdrawing money is the last money of your investments. Whether you have reached your goal of saving up for a house or your retirement, there’d come a time when you’d have to withdraw your money.

However, as compared to buying yourself a house and withdrawing all you need at once, retirement is a different ball game. Retirement is a duration that could last anywhere from 10 years to 30 more.

It’s hard to figure out how much to take out at once, whether to stay invested or whether to take it all out.

One way of withdrawing for retirement is by making an initial withdrawal of some percentage of money and adjusting it for inflation every year.

Let’s say you are withdrawing 4% of your portfolio every year. This means that if you have 50 Lac Rupees in your portfolio, you can withdraw 2 Lac Rupees every year for general expenses and keep the rest of it stored in your portfolio.

The goal is to stay self-sustained and be wise with your money. As you progress in the years ahead in your retirement, your withdrawal rate can accordingly influence depending on your expenditure or your plans ahead.

The Secret of Investing FAQs

1. What are the 5 Golden Rules of investing?

The five golden rules of investing are:

• Start saving early

• Don’t rush your investment decisions

• Research the markets where you’re putting your money

• Don’t put all your money in one place

• Don’t chase performance.

2. How can I invest smartly?

Investing smartly is an important part of investing your money. One of the best ways to be smart with your investments is to research the fundamentals of the market you are investing in. Moreover, don’t fall for people who say certain stocks could make you rich.

3. Who is the father of investment?

Benjamin Graham is known as the father of “value investing”. He is the writer of the book ”The Intelligent Investor” and was fundamentally one of the smartest economists.

4. What are the 3 principles of investing?

The three principles of investing are:

• Forming a goal or an objective with your investments
• Diversifying your investment portfolio
• Controlling the costs.

5. Who is the richest investor in the world?

Warren Buffet is the most successful and richest investor in the world. He has a net worth of more than $116 billion and is the fifth richest person in the world.

Conclusion

There you go. You have found 7 secrets of investing today.

It makes a lot of sense that you are responsible for your hard-earned money. While there are plenty of opportunities, there are also plenty of ways your money can fall into the wrong markets.

Take time to analyze. Rather than finding the ‘next great stock’, find markets and securities you trust. You’d find it more beneficial to stay invested in markets that you trust.