3 Principles of Investing
14 Jun 3 Principles of Investing
Posted at 10:35h in Social Impact by Billy Epperhart 2 Comments
No one ever got rich by earning and saving. The first time I heard that my whole perspective on money began to shift. If you don’t get rich by saving your money, how do you do it? I had to know, so I began aggressively investigating how to build wealth. A huge part of the solution is to invest your money.
Investing can be overwhelming, especially when you are just getting started. Today, I wanted to share with you my top 3 principles of investing so that you can gain some knowledge. I encourage you to do your own research as well. I suggest that you spend 5-10% of your income investing yourself, and have a professional invest 5-10% of your income as well.
1. Evaluate the Value
Don’t just invest because someone says it’s a good idea or they had success. Investments should be evaluated alongside your personal portfolio. You always need to know how much of a return you will get on your investment, and how long it will take you to receive it.
Sometimes, what is popular isn’t always what’s best. The stock market crash and the housing crash are good examples of this because markets can get oversaturated. When investments become too popular, the risk of a crash rise. This doesn’t mean you shouldn’t invest in things like the stock market or real estate, in fact, I advocate for it, I just want to caution you to evaluate your investments based on the value they will bring to you and your portfolio.
2. Diversify Your Portfolio
Diversifying your portfolio is another way to mitigate risk. You don’t want to put all of your eggs in one basket. What I mean by that is take a percentage of the money you have set aside to invest and spread them out. If you put all of your money in stocks and the stock market crashes or simply goes down some point, you lose all your money. However, if you have some money in stocks, bonds, and real estate, the stocks can go down but your investment in real estate is safe.
Investing can be risky, and that’s why it is scary to a lot of people. There are ways to lessen the risk of losing money, and diversifying your portfolio is one of them. This is where the idea of investing 5-10% of your income yourself and letting a professional invest another 5-10% works well. You will likely invest in different things, and naturally, your investments will be diversified.
3. Invest in Doing Good
Finally, I believe the purpose of wealth is to bring the Kingdom of God down to Earth. One of the best ways to do this is to invest in social impact and organizations that are helping others.
My non-profit, Tricord Global, allows individuals and business to invest money with us, which we then turn to microfinance loans through our banks. These loans are given to Christian entrepreneurs in developing nations who need start-up capital, or a little extra help to keep them afloat. Our investors get 4-8% interest rates, which is high for most investments. It is a win-win for both parties because those in developing nations are getting the help and education they need, and our investors are able to make a Kingdom Impact while getting a great return.
I hope these principles of investments have given you some insight into what you should be doing with your investments. There is so much more I could go into detail about, and I will, but I also encourage you to research for yourself!
invest, principles, social impact
Posted at 12:00h, 14 June Reply
Thank you again, for sharing your experience.