3 Most Timeless Investment Principles You Should Apply


Investing is a very important because it leads to wealth creation. A person who does not invest no matter how much money he/she earns is bound to become bankrupt. This is why you should always learn to invest. There are exceptional people in the history of this world who achieved a lot by investing. They even formulated principles that continue to guide millions of people about investing. Those who have applied them have become incredibly rich. A perfect example is Warren Buffet.We are going to provide you with 3 most timeless investment principles by the world’s greatest investor and investment mentor Benjamin Graham. These excellent principles will guarantee you success. Take a look at them here.

1. Always Invest With A Margin of Safety

This is where you buy a security at a good discount in relation to its inherent value. Such kind of security gives the buyer high return opportunities. It also helps to reduce the risk of investing. Benjamin Graham applied this principle by buying an asset that was worth 1 US dollar at only 50 cents.

As an investor, you should learn to apply this first principle because value investment generates considerable amount of profits at a very low cost. This mainly applies in the stock market where prices go up thus enabling you to get huge profits. In addition, the principle will provide you with protection just in case things do not work in your favor or the way you had planned.

It is believed that the idea of buying assets at a cost which is lower than their actual value is the main reason behind the success of Benjamin Graham in the field of investing.

2. Expect Volatility And Profit From It

According to Benjamin Graham, investing in stocks is equals to dealing with situation of volatility. He says that a great investor does not shy away from investing when the market condition is not favourable. Instead, he looks at the downstreams as an opportunity to maximize on and invest wisely.

As an investor, you shouldn’t be dictated by the situation. Instead, you need to come up with your own estimates on the value of your business. But this should be after having examined facts with rationality. In addition, you are only advised to buy if the price that is being offered is sensible. Then sell your asset when the price shoots high. You can take advantage of volatility by getting good bargains in the market or selling your assets when they are overvalued.

3. Know What Kind of Investor You Are

According to Graham, every investor should know who he/she is. He classified investors as either active or passive. An active investor is supposed to invest a lot of time and energy for him to be successful. He should be willing to do research for the best returns .On the other hand, a passive investor gets returns but uses little time and does less work. If you are a passive (defensive) investor, you are advised to invest in stocks and bonds. You will be able to benefit from areas that perform well.

Parting Shot

The above investment principles by Benjamin Graham are very beneficial to any person who wants to invest. He is the father of investing and his principles have made a number of people successful including one of the richest man on the planet; Warren Baffet. You are advised to use them if you want to improve your investment skills.

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