Before beginning the journey of investments & returns, one should know a few basic rules about investments.
1) Invest for long term. Those who confuse investment with trading lose badly & never invest.
2) Everything has a purpose in life. Investments too should be made keeping the goals in mind. So first define your goals then invest accordingly to meet your goals.
3) Book your profits. Don't be greedy. When you have good profits on table make sure you book partly or completely. Similarly exit when planned instead of making arbitrary or opportunistic decisions to wait.
4) Never put all your eggs in one basket. We will come to this when we discuss about asset allocation.
5) Start as early as possible. Giving your investments more time is best thing you can do to them.
6) Invest regularly. It is not a one day, one month game. Keep saving & investing regularly, they will come handy in the bad times. Howsoever small it may be make it a habit to keep aside some part of your salary every month.
7) Get into things you understand. Don't try to pretend you are an expert just because you have made some money. Things can go horribly in very short span of time wiping out your entire savings if you try to be overambitious.
8) Don't fall for hearsay things/rumours. Everyone in the market has his opinion & ideas. Respect everybody's opinion but follow your own research. Yes do some research before you enter the market. Remember above point you must understand what you are doing.
These few things, if followed diligently will stand you in good stead. Please tell us your opinion about investing & ask your queries in comments.
