Practically speaking to survive you need lots of money. Hard work is surely one of the best ways to make money. But you also need to invest smartly. Combination of hard work and smart work will reap huge benefits. The best investors in the world will tell you that if you want to make money from the market then you need to follow some principles and you need to have a proper strategy. Here some wealth principles from the best investors from across the globe.
Principle no 1 from Dennis Gartman
This man started the The Gartman Letter in the year 1987 which is used by hedge funds, brokerage firms, mutual funds, and grain and trading firms from across the globe. His principle is:
“Be patient with winning trades; be enormously impatient with losing trades. Remember it is quite possible to make large sums trading/investing if we are ‘right’ only 30% of the time, as long as our losses are small, and our profits are large.”
This rule tells the young investors that you will not always be correct, but if you want to emerge as a winner, then your winning trade must be more than the losing trade. His rule actually describes the common mistakes that young investors make.
Principle no 2 from Warren Buffet
The richest man in the world and one of the most successful investors in the world needs no introduction. His principle is:
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
He points out that you first need to evaluate the quality of the company by checking the details like balance sheets etc. Only after that, you must evaluate the worth of that company.
Principle no 3 from Bill Gross
The co-founder of PIMCO he has managed one of the largest bond funds in the world. His principle is
“Do you really like a particular stock? Put 10% or so of your portfolio on it. Make the idea count. Good [investment] ideas should not be diversified away into meaningless oblivion.”
He is mainly pointing out portfolio management in his principle. Young investors must understand the importance of diversification. But for this, it is important that you do extensive research and pick the right product for investments.
Principle number 4 from Carl Ichan
He is a private equity investor who has bought large stakes in big companies. Some of his holdings are Time Warner, Yahoo, Clorox etc. His principle is
“You learn in this business… If you want a friend, get a dog.”
He clearly wants to point out that when making investments you need to use your own brain. You need to do your own research and zero down on the best investments. You must not rely on the advice of a friend or a so called well wisher. When you are investing, you need to consider the facts and not the opinions of people around you.
Investing Through ULIPs and Mutual Funds
If you consider all the principles you will realise that smart investments are based on research. You need to know where and how you want to invest. With stocks especially, you need to do thorough research before you get into one.
However, ULIPs and mutual funds offer respite from being a professional investor to the common investors like us. We can be sure that the fund manager running the fund will be aware of these principles and will follow them to generate the best returns for you.
ULIPs out of the two, have one huge advantage over mutual funds, that is tax efficiency. Not all mutual funds can offer tax saving, especially safer funds do not offer any tax saving. However, with ULIPs you can avail tax benefits even while investing in Gilt funds.
Moreover, ULIPs also offer added benefits to long term investors. You can check these benefits and how they will impact your returns from ULIPs using the online ULIP calculator.
Overall, you may love to grow your money as much as the greatest investors, but investing may not be the core profession. Even if you are a doctor, photographer, or a white-collar employee in a large firm you can use ULIPs and MFs to benefit from the principles of greatest investors.