Rules for successful investing

One of the first things you should consider is how you maximise your wealth building. If you are already invested and your portfolio is producing solid results, then it could be a good idea to reinvest the returns.

If you are in a position where you don’t need to spend the income that your portfolio generates, reinvesting helps you to build your investment capital. And over time this is where you will see the benefits of compound interest.

This can be a powerful strategy because each time you reinvest, you are boosting your future potential returns… whereas if you simply withdraw your income and spend it, you tend to stay at the same level of earning potential.

Of course, if you need the investment returns to pay for something specific then that should be your priority, but even if you can reinvest just some of your earnings it can be advantageous in the long term.

Focusing on the long term is essential when you are an investor.

You need to make sure you don’t get bogged down in the day to day market movement.

Short-term activity tends to have greater risk and if you pay too much attention to the volatility you could end up panicking and making rash decisions.

When you commit to a long-term strategy, ideally around ten years, you are more likely to experience consistency and feel confident in your decision making.

In today’s world of constant information, you’ll be hearing about new investment opportunities almost every day… but it’s crucial you recognise that not everything you hear deserves your attention.

Try to become immune to the buzz or noise around the latest ‘sure thing’ and resist the urge to follow the crowd.

Usually, when word gets out about a sound investment, lots of people will jump and end up buying past its peak.

Just remember, if something sounds too good to be true… it usually is!