The Basics of Investments

[GiftedMAN]

Don't invest in the line of business that you don't understand that much because your friend is making profits from such business and you feel that it will work out the same way for you.

Any one who thinks they can start up a business because they saw other people doing a particular business and making profit in it will end up investing and losing money because they have no idea of the business they just got into. There are certain things that works for the business person with a great idea which may never work for someone who decides to copy them in business. To succeed in business you saw a friend doing the best thing is to learn from the person, gather ideas before establishing your own.

[Coyster]

Understanding the market you want to invest in is one of the most important basics of investments. For example if you want to buy gold, you need to understand certain things about gold, if not you might end up with a counterfeit product, if you want to buy crypto, you need to also do your own research, so you don't buy wrapped bitcoins, thinking you have bought bitcoin, etc.

That said, you should also understand the law/regulations around the market you want to invest in, you need to understand the taxes attached and what you'd be doing that could be illegal.

[Kagaru]

Underdstanding the market you want to invest in one of the most important basics of investments, for example if you want to buy gold, you need to understand certain things about gold, if not you might end up with a counterfeit product, if you want to buy crypto, you need to also do your own research, so you don't buy wrapped bitcoins, thinking you have bought bitcoin, etc.

That said, you should also the law/regulations around the market you want to invest in, you need to understand the taxes attached and what you'd be doing that could be illegal.

Exactly you cannot just get into something because it sounds profitable. There are its own language risks and tricks in every market. Similarly to crypto, people invest in something after being hyped in something they do not even understand and are surprised when it drops, or is revealed as something completely different. Just like gold or a real estate or anything in fact. And it is also important to know the legal part since earning money is nothing but getting into trouble. The power that you really have in any type of investment is knowledge.

[aylabadia05]

The basics of any investment starts with financial education. One must be financially literate to embark on any business venture. This is the minimum entry requirement even before we begin to talk about the other key principles that have already been mentioned, like risk awareness, diversification, patience, strategic withdrawal, and others.

Having money that is not distracted by other needs is an entry point into the wider world of business known as investment.
What is investment that must be truly understood before being at the level of investment goals.
Speak the truth that the purpose of investment is to gain wealth. You can invest if money is available. If less, you can't. This is not the thinking of people who do not want to think, but this is the real talk that applies to people who have good finances.

[CageMabok]

...

Exactly you cannot just get into something because it sounds profitable. There are its own language risks and tricks in every market. Similarly to crypto, people invest in something after being hyped in something they do not even understand and are surprised when it drops, or is revealed as something completely different. Just like gold or a real estate or anything in fact. And it is also important to know the legal part since earning money is nothing but getting into trouble. The power that you really have in any type of investment is knowledge.

Apart from knowledge that can be the basic foundation for an investor’s power in a particular asset, other powers such as capital, mentality and also experience (including experience from others if any) are also very necessary because investors who already have all of that will usually be very resilient when seeing the waves and risks they have to face in the market. And in this case I just want to suggest to everyone not to jump into something right away when we just hear it from someone else, but if we just want to buy Bitcoin after reading a little about Bitcoin, I think it’s also not a mistake if we want to buy it as soon as possible.

[uneng]

Patience and endurance are two very important traits when investing money. You have to be patient in order to wait long periods of time to see financial returns or to build a solid income from an investment, at same time you must resist setbacks, while finding the necessary strength and motivation to overcome them, so you don't completely give up on your investments and long term goals.

I see people nowadays want everything instantly. If something takes too long to happen, they lose interest or get annoyed. As consequence, they are unable to build long lasting finances along the time, always falling for the cheap tricks which promise high returns, but end being a deception.

When you have patience and endurance, you also become a more disciplined individual.

[Uruhara]

Final Note:
At the end of the day, investing is a journey. It comes with risks, rewards, lessons, and sometimes losses. Just make sure you’re informed and intentional. That way, whether it works out or not, you’ll know you moved smart.

Thank you OP for the insight you share regarding the basics of investment, which actually seem quite trivial, but actually this is a very important initial foundation to know for everyone who is new to investing and wants to start investing. Many people are quite lazy about learning the basics related to investment. Which makes it easier for many novice investors to experience losses.

Addition from me is that there are a lot of scams under the guise of investment nowadays. And indeed this is where it is important to recognize each investment instrument that we want to enter well. So that we can avoid all forms of fraud in the name of investment.

Better late than never in investing because it is important for the future. And it's better to be slow but consistent than to be hasty but inconsistent.

[Scarlett_23]

6. You Can Lose It All
You may have genuine intentions and a good heart, but that doesn’t stop life from happening. Timing, market crashes, bad seasons they happen. Be ready for it, and don’t take it personally when things don’t go your way.

I like this part because most investors only think about the positive aspects of their investment without thinking about if thing happens the other way round. As an investor, there is need to calculate your the risks involved in your investment and bear in mind that there will surely come bad times when it look as if you have made the wrong investment decision but those challenges are what makes an investor become stronger to still continue without feeling the impact of how the market turned out. Having the feeling that you can lose all your investment will give you the idea to not invest all your money but with just what you can afford to let go without feeling bad about it.

Being successful at the end of a task is a big deal. However, even if you fail, you can learn a lot from it, which acts as a stepping stone to success later. It is natural for any investment to have risks. And this is something that investors must remember, so if they do not succeed, at least they will not suffer from mental illness.

Many times, even if the investor is very experienced, such unexpected reasons can occur that can cause their investment to fail.

However, it is possible to recover from this failure over time. The market does not always go bad, if you do not sell immediately after the failure, it is possible to turn around if you wait patiently.

[gunhell16]

In general, investment helps anyone who decides to enter this category of opportunity. And there are only two ways our capital can be directed here, firstly, our capital can be multiplied or lost, that is why it is important for our investors to invest while still being prepared for the consequences that we can face here.

We take risks in short in the investments that we will enter, this is also the method of the majority of investors in the field of business industry,
even all the governments of countries around the world today.

[TopT3ns]

In general, investment helps anyone who decides to enter this category of opportunity. And there are only two ways our capital can be directed here, firstly, our capital can be multiplied or lost, that is why it is important for our investors to invest while still being prepared for the consequences that we can face here.

We take risks in short in the investments that we will enter, this is also the method of the majority of investors in the field of business industry,
even all the governments of countries around the world today.

We are in the age when financial choices are not anymore weighed by the issue of saving, but on how to make money work when we are counting our excuses. I concur with the fact that the world of investment has two very tangible faces, it can raise or dissipate. However, that should not scare us. Actually, when we have managed to see the evil potentials, we end up being less tense in our strategies. The thing is, you know, investing is not a matter of luck, it is preparation. Any person who would venture into this field with a clear mind, not with sheer imaginations, will realise that defeat could set in, but certainly not defeat.

We must be taught to stop being attracted by instant gratifications and to view things in long term perspective. Otherwise, we will simply burn out since we are just looking forward to fast outcomes. Today, even countries, numerous large investors are willing to make sharp prospects. Not that they are always certain but because they know that risk could be managed well with patience and lack of greed. Yes, you are right, we must pay attention to consequences, but remember that our daring now can unlock some doors which we could not believe in tomorrow.

[KiaKia]

What can I say to this? Well your advices are valid but the most important thing is you, be different and you will get different result, many people are working towards the same goal as you, and that is the problem.

We all want the same or similar thing, and we are investing, those who claimed that the biggest money comes from war knows what they are saying, when everybody is expecting the same result it's likely it will never happen.

Pain, disaster, war, famine and so on are big opportunities for those who knows and that's why such people are in power, the religious mind that people have today will never make them to reason like this but it's the bitter truth.

In investment, when massive pain is happening and everyone is giving up that's where the biggest opportunity provided itself.

[Coyster]

In investment, when massive pain is happening and everyone is giving up that's where the biggest opportunity provided itself.

This is the reason why financial literacy is so important and it is impossible to get rich without it. Without being financially literate, you'd not be able to spot opportunities in places where people think there is none, you'd always be waiting for the right opportunity that may never come, whereas within that time a lot of people have created their own opportunity and made the most out of it.

So many finance authors would tell you that money is numbers, that it is just a game and i believe them, the only reason why everyone isn't getting rich despite how simple it sounds, is because only a few know how to really play the game efficiently and one way to start is by being financially literate.

[lionheart78]

1. Understand the Business You’re Investing In
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2. Investment Is Not a Get-Rich-Quick Scheme
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I think these are the two most important points and all the rest are rather irrelevant. Starting with point two, many people see in the media and movies that people put one sum of money into an investment and get super rich from it - but that is extremely rare and not how most people find success. Success for the average person is a long road that requires commitment and understanding that they should keep adding funds through good times or bad. It takes most people decades of investing before they will be able to enjoy the fruits of their labor, but when it comes it is abundant enough to retire on. As for point one, 99% of people would do much better just investing in diversified ETF funds rather than trying to pick individual companies because unless you have the time to research them you will be wasting money.

I highly agree but this should come with proper financial management, as the earlier reply stated.  Without proper financial management, all the effort, money, and time will be in vain because it is more likely that an overexpenditure will happen.  And that overexpenditure will likely kill the investment.  At the beginning, overexpenditure may not be a problem because there are still funds that will fill up on the useless extra spending, but as time goes on, this useless extra spending will have weight and may give a heavy blow to the cashflow.  So as much as possible, financial management should be applied even before an investment is made.  This way, all things will go smoothly.

[iv4n]

Although these rules sound great, in practice it is much more difficult. First of all, investing requires money, and many people in this world struggle with money... There is never enough of it.

3. Don’t Invest All Your Money

6. You Can Lose It All

As in gambling, never invest more than you can afford to lose. That should be the rule no. 1!

b]Final Note:[/b]
At the end of the day, investing is a journey. It comes with risks, rewards, lessons, and sometimes losses. Just make sure you’re informed and intentional. That way, whether it works out or not, you’ll know you moved smart.

It is a journey, and will it work for someone or not is impossible to say... that's why everyone needs to be free and give it a try. Don't be afraid to spend some money, but before that, do your own research and start learning & earning.
 

[Josefjix]

You can lose it all, a lot of people don't consider this before starting up an investment, it's all risky and it's possible for you to end up losing everything you invested this is why it's advised for people to always invest what they are capable of losing, no matter how legit or sure you think that investment might be there's a possibility that it might go south at the end. Always learn to think smart and have a plan b

You are right but you may also be wrong, what if the investment plan is successful without having a plan B as you said, nor neither loss his money but profits in everything.

What's necessary when investing in knowing when it's enough, the thirst for more money while you are already stable financially leads to lost in everything so far, the possibility of becoming successful is extremely slight because going higher level needs another higher experience that keeps it maintained in profits and marketing and whatever.

So aiming for more and never satisfied, not knowing when it's enough is the cause of loss of investment capital.

[JiiBs]

Below are a few important points to take note of:

1. Understand the Business You’re Investing In

Venturing into a business or any field simply means you having to know them or you employ the services of those who know them to walk the path with you. It ensures you don’t get to make too many mistakes and several ends to make the venture a success scaled through.

3. Don’t Invest All Your Money

On this, I could say I have heard stories, none fictional stories or should I say testimonies of those who invested their all, not in Bitcoin but, in other fields of human endeavor and scaled out a success. Sometimes, a venture might require all you’ve got and all you’ve got you would need to give.

[DaNNy001]

The second point is very important, investment is not a get rich quick scheme...the problem with a lot of people is that they think an investment is something that should always pay off quickly, there's a reason why it's called an investment.. Always fix your mind on getting back anything you are putting into it at a long term basis...some people get impatient probably because of their needs, this is why you shouldn't invest all of your money

[Ziskinberg]

Final Note:
At the end of the day, investing is a journey. It comes with risks, rewards, lessons, and sometimes losses. Just make sure you’re informed and intentional. That way, whether it works out or not, you’ll know you moved smart.

Investing is a long journey, reason why most person fail because they don't see it that way. Choosing the right investment also matters according to surroundings and economic state, if your investment is not suitable according to standards, all efforts put into the project will fail causing the investor to lose large portion of his capital.

Investors are meant to be strategic, expecting greater achievement will demand plus size application of ideas, doing it the common way will give same results as a mere investment return, best pay off demands extra strategic effort.

It’s really crucial that a person should choose the right investment and know his investment well. That’s the ultimate goal of investing, building the foundation of your investment so that it will generate good flow of profits for you, otherwise even if you have all the strategies and luck applied to your investment, but if you are investing on a wrong one, you will never see your investment making progress in the market.

Know your investment well, so that you can maximize the potential outcome of your investment.

[passwordnow]

On the other end of being financially literate is patience. Patience will keep you in the game for the long term and guard you against falling for scams because you want to get an ROI of 120% in a short time.

This is what OP didn't mentioned but I am glad that many have mentioned this, patience is a must for every investor. So, if it's about the basics of investments, it's true that patience is one of it. And that is right, it's a guard for scams because usually the scams will give a false promise about quick returns, and more than the amount you've invested. That's why many are falling for it, they don't have the basics of it which is being patient. But if all investors are patient, they're unlikely to fall from such situations and they'll even thank themselves for learning how to be patient.

[justdimin]

if all investors are patient, they're unlikely to fall from such situations and they'll even thank themselves for learning how to be patient.

Being patience and investing are highly related but the basics of investment principles are not limited up to that level. What would happen if you invest with a saturated business or an asset with no future, there being patience got nothing to do with your profits. I mean to say being patience will help only if you are good at choosing right assets. You need to be skilled for where to be patience and where to switch your investments often.

Although these rules sound great, in practice it is much more difficult. First of all, investing requires money, and many people in this world struggle with money... There is never enough of it.

Investments is a method to achieve the state of having "enough money". Yeah, people struggle for money but not dying because of starvation of money in most part of the world. So, you may invest 10% or 20% of total money which may help you to tackle your struggling for money. If you are not ready for those 10% or 20%, then your struggle will last forever.