4 investing rules to live by

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You know you can do it. But how? The current stock market is creating huge opportunities to invest - even during a pandemic. And unless you majored in finance or are a stock broker yourself, you may not feel confident enough to start investing on your own. This free report aims to give you the confidence - and the right know-how - to dive right into the stock market.

We'll show you how. Don't be left out! Get My Report The 10 basic rules of investing that can make you rich — or at least financially comfortable In addition to sorting through the myriad choices we have in the stock market, investing can be scary. Recession, bear market, market correction, and market crash are not words you want to hear in relation to your money.

On the flip side, however, the market could surge or recover, it might hit record highs, or you could buy into the early stages of a new bull market. How, exactly, do you get the good stuff without putting your money at risk? Some of the leading investing legends like Warren Buffett, Benjamin Graham, and Sir John Templeton have several common traits: They have methodologies that make sense They are disciplined in their investment processes They work hard and stay focused They are patient They successfully handle their psychological biases Investors like Warren Buffett and Benjamin Graham embody these traits.

Even though these rules are simple, they can be hard to stick with. If you want to argue with Warren Buffett about investing, well, we wish you luck. Seems fair. We might add one more: make money. In truth, the rest of these rules just help you follow these three rules. Go against conventional wisdom. Attempt to be fearful when others are greedy and to be greedy only when others are fearful.

Going against the crowd can be an effective way to make money. The right question is: Where is the outlook most miserable? The obvious application of this concept in practice is to avoid following the crowd. As a result, they are more likely to present opportunities to find bargain-priced stocks. Look for solid return on equity, high operating margins and low debt.

Is it a low return environment? Are yields low? Are asset prices inflated? In times when the markets have stretched valuations, and yields are low, there is a temptation to take on more risk in order to reach a higher absolute return. Buy those junk bonds. Invest in those high flying stocks. Reach for yield. Reaching for returns will have you dialing up risk at the worst possible time. Accept the lower returns if that is what the market is offering. Thinking in decade time horizons will force you to think about the quality of the assets you buy, not the momentum of the market.

Looking for decade-long investments will also leverage your time well. This is also good advice for taxable accounts — buying and selling assets generates capital gains which means taxes you will owe to the government that could be working for you instead! Rule 8: Use leverage with care Never buy stocks on margin.

The only time I advocate using leverage for investment purposes is with real estate. The cheap cost of capital, long term fixed rates, investment yields, tax advantages, and relatively stable nature of real estate make it better suited for these purposes. But even in this case, be very careful how much leverage you apply. Stress test all of the properties you buy. What happened to property prices from ?

What happened to rental rates? The key here is to avoid becoming one of those forced sellers see below. Rule 9: Never be a forced seller The best opportunities to buy assets come along when people are being forced to sell. In , the stock market was full of forced sellers as credit collapsed, prices dropped, and margin calls were made. From , landlords got crushed with rental price declines and vacancies.

They were forced to sell their properties at steep discounts. What this also means is that you never want to be the forced seller. Since buying from a forced seller is the best thing in our world, being a forced seller is the worst. Howard Marks — The Most Important Thing This is why all the preceding rules are so important — buy quality assets you would be comfortable owning for decades, with only modest leverage that is manageable, should the worst case scenarios come true.

Sometimes faster than we can ever imagine. A typical mortgage will last 30 years… 30 years ago was Personal computers were a novelty, the internet was barely a thing, cell phones were the size of shoe boxes, and you were lucky if your car had power windows.

Given that we live in an uncertain future, the only way to defend against this is to diversify your bets. This is a useful way to think about things — for example, if your net worth excl. For the stock market this is a pretty good heuristic. Diversify across a few markets with different economic drivers and dynamics. Diversify across asset types — multifamily, commercial, self storage etc. This diversity will make it much harder for you to get wiped out in any given downside scenario.