- Taking financial responsibility
- Knowing when not to invest in a business idea and
- Being wary of new "investment schemes"
10 Basic Rules for Finance, Investments and Financial Investments
- Avoid lending money to friends and family as much as possible
- Investigate properly before you invest
- Do not get absorbed by gains too easily
- Recognize the process
- Before you borrow for a startup, make sure you have dusted your books over again
- Keep birthing new investments
- Always make and implement a budget
- Don't borrow for ostentation
- Save less than you invest
- Don't give up
Avoid "Lending" Money to Friends and Family as Much as Possible
However, when you lend money to family members and friends, the ties and relationship you already share with them can give them the leverage and freedom to conveniently use up the money as though they did not borrow it from you.
In this regard, it is important that you fix your mind to give to them what you can afford to forget if they default in order to avoid unnecessary riffs to your union and relationship with them.
Investigate Properly Before You Invest or Take Risks
Every business opportunity has its own risks and challenges, and you can only succeed at it if you know the risks already and you work on your strengths to overcome them. The first warning sign is when they present the business offer without revealing what the risks are.
Another thing your investigation should comprise of is your thorough assessment if you can fully handle the offer even if it were genuine. I have had to fail in many offers I accepted too quickly or because someone I trusted recommended it. You can believe testimonies from people to an extent but never jump in too quickly
This must not be confused with fear of taking risks. But when it comes to financial investments, where there is really no tangible business involved, you must be extremely careful. I am assuming you read what financial investments are already.
In any case, you can never find out the truth by solely listening to the testimonies of others. You must find time to do your own questionings and investigations.
Do Not Get Absorbed By Gains Too Easily
If you look out to double your money in financial investments, Frank Hubbard has a recommendation when he stated that "the safe way to double your money is to fold it over once and put it in your pocket". Frank in this quote was contrasting between safety and growth. When you are going to invest in stocks, you have to accept that your money is at risk, meaning it can lose value. On the other hand, it can also yield compensated returns. However, if you always want to play it the safe way, you will not experience growth because merely folding your money once and putting it in your pocket does not in any way double the value of the money.
The only challenge is knowing when and what to invest in and not.
Recognize The Process
I was discussing with one of my mentees one day when I mentioned to him, "it is a great thing to start small because in so doing you actually know how to make it big". I paused a while before I added the second part for more clarity. "If you are given a very huge amount now, without the knowledge of financial management which you will learn as you grow, you will squander that money to the minimum zero without anything to show for it".
Some of these principles have very living proofs but so many people are just not ready to live by them and they end up regretting how they have wasted their lives pursuing what should run after them the moment they discover the secret.
If you really desire to be wealthy, never turn off the slow phases, they are what builds you up for greater success.
Before You Borrow For Startup, Make Sure You Have Dusted Your Books Over Again
- Personal funds
- Loans from banks
- Money from friends/relatives
- Government grants
- Business angels/angel investors/venture capitalists
Borrowing from friends and family may not confer very severe consequences when compared to those from other sources, but like we already talked about the consequences may be more material than financial, if peradventure, you fail to deliver your own part of the deal (pay back the money) at the set time.
Keep Birthing Newer Investments
If you truly desire to stay ever-green all year round, you have to learn to diversify your private and/or corporate economy.
When you make profits, you can choose to use up all your profit and start all over with your initial capital, or you can decide to set aside some part of that profit for more investments. That's as easy as you replant your seeds after your previous harvest, and if you think really hard about what to invest in, that would be a topic for another day.
Always Make and Implement a Budget
A budget helps you to keep track of your expenditures in relation to your income, and what is even more interesting about it making a budget is that you also need to adhere to it. From my experience, I can be sure that adhering to a budget isn't that difficult if you cultivate the habit of carefully scrutinizing every one of your spendings. After all, you were the one who made the budget, weren't you?
Becoming the driver requires diligence and hard work up to the point when you have gained financial freedom.
Don’t Borrow For Ostentations
Many people buy items that they are not worth and to make it worse, some could go great lengths to get them even if it means having to borrow. But you must avoid borrowing for things that will are basic or essential to your livelihood. There is no need to accruing debts for items that can be considered liabilities. Instead, live within your means while you aim to improve your financial standings.
Save Less Than You Invest
Saving is never considered the best option as far as investments are concerned. Therefore, you must seek ways to invest some of your cash rather than trying to simply stock it up somewhere.