Tuesday, April 21, 2015

19 General Investing Tips for Beginning Investors

I have been an investor for over 12 years and what I have learned from my experience, and from mentors is that all investing is the same.  You buy something, you sell something.  It doesn’t matter if you’re buying one block of gold or an entire shipment, a stock, an existing company, an art piece, a house (not your residence), a foreign currency, etc.  The objective is to sell these things to someone else for more than what you paid.  The second and equally important objective is to get something (whatever) for less than what it’s worth.  And determining what something is worth can be hard.  What something is really worth boils down to what someone else is willing to pay for it!


Investing also involves various levels of negotiation.  There will be times when no negotiation is required, i.e., someone will take your price.  Why?  There’s always a reason and in these cases, desperation is the emotion driving the other side of the deal.  You’ll get the best deals when the seller is in a distressed situation.  Most of the time there will be some negotiation involved and in these cases you have to know your maximum price to pay for whatever the seller is selling.  Any price point beyond this maximum and you will fail to turn a profit later.  The point between maximum profit and no profit is your “margin of safety.”  If you’re not careful, and buy at the wrong price, you will erode your margin of safety and in turn diminish your returns.

I’ve taken the liberty of writing out 19 general investing tips for beginning investors with the intent of shedding more light on the topic.  Perhaps these tips will simplify what investing is, and let you visualize yourself taking part in something I find to be truly enjoyable.

  1. In real estate, investing is more of a win-win.  In the stock market, it’s every man for himself.  Know the playing field.

  1. Enter the playing field (the stock market, the real estate market, the Forex market, etc.) knowing as many of the rules as possible.  It’s always best to have another investor introduce it to you.

  1. Get really good at appraising value.  Time and experience improve your appraisal skills.

  1. You make most of your money when you buy, at the front-end, not when you sell, or the back-end.  If you’ve bought high, only a miracle will keep your deal from not smelling like backend.

  1. Taxes are expensive.  However, never overestimate the impact of taxes, meaning don’t let taxes keep you from selling to either get out or get cash for a better opportunity.

  1. Taxes are expensive.  However, never underestimate the impact of taxes, meaning don’t let taxes eat away your profits by not minding them, i.e., not having a tax saving strategy for each of your investments.

  1. If you see money as a hammer, every opportunity will turn into a nail.  Money is a tool to be used, not left gathering dust in a bank account earning zero interest.

  1. There’s risk and there’s reward.  But your behavior, how you deal with risk and what you do with your rewards, matter more.

  1. There’s death.  There’s taxes.  And there’s inflation.  All three are certainties.

  1. In any deal, you’re not charged a single penny for asking a question.

  1. Don’t fall in love with the first investment home you ever buy.  Get a few flips under your belt as quickly as possible, so you have staying power, working capital to get on with your next deal and be able to deal with the things that will invariably come-up.

  1. If you want maximum and accelerated gains, don’t diversify.  Put all your eggs in one basket, but make sure you have a tight grip.

  1. Just get out there and do it.  Thinking too much about it will paralyze you.

  1. Don’t let one mistake stop your investing career.

  1. My father-in-law made millions of dollars investing. He spent it all on booze, women, and divorces.  Don’t be like my father-in-law.

  1. You DO need money for investing.  Using Other People’s Money (OPM) is preferred.

  1. Surround yourself with good and reliable people.  If they don’t have these qualities, don’t hesitate to get rid of them.

  1. Learn how to negotiate.  Negotiations and investing are dance partners.

  1. The best tip of all...don’t invest money you can’t afford to lose.

If investing is still too scary for you, consider this:

There is more risk in driving a car than there is in investing.  People are okay placing their lives in danger almost every single day, getting behind the wheel.  Yet it’s the thought (fear) of losing money that keeps them up at night.  Go figure.
Thanks for reading.  Need courage?  Email me: calilimexica@yahoo.com.  Before you go, don’t forget to subscribe to this blog so you won’t forget it exists!  Also, go ahead...leave a comment and let us all know, what scares you about investing?     

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