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Being Comfortable

It is important that you be comfortable with you investments. Many wrong decisions are made while in a state of discomfort.

How do you make yourself comfortable? Here are some general rules:

  1. Only invest what you can afford to lose. Do not become so invested in an idea that the execution of that one idea will make or break you financially if it doesn't work out.

    You need to survive your current investment so that you will have money to make your next investment.

  2. Invest what you consider to be small amounts of money. Why lose sleep over any one investment?

    For many people, this is 5 percent or less of their net worth. A good rule of thumb is never put more than 1/12th of your net worth in any one investment vehicle.

  3. Give yourself time. Good ideas come back again and again. If an idea is a good one today, it will generally still be a good idea tomorrow and the next day. Try to avoid acting on any investment decision while in a state of urgency.

  4. Let your ideas revisit you before acting on them.

    Your best ideas will revisit you often. It's your ideas that revisit you again and again that generally work out best.

  5. Know yourself well enough to know why you are investing. If you are not sure why, then hold up and wait. Take the time to be absolutely sure that the reason you are making an investment far exceeds wishful thinking.

Know yourself and know your investments. If you will do this, your investments will provide you with both comfort and security--now and in the future.

©Edward Abbott 2002