From someone who is considered one of the greatest investors of all time

During the past century, many of the world’s leading economists have studied the science – or art – of investing. A large number of investing systems, models, and theories have been created, most of them requiring a PhD to understand. But when it comes to learning how to invest, sometimes it’s best to turn to the people who actually do it for a living.

Case in point, take Peter Lynch.

From 1977 through 1990, Lynch ran one of the most successful mutual funds ever, posting an average annual return of 29%. Over his career, Lynch espoused many investing principles, but there are seven in particular that I think all investors should keep in mind.1 So without further ado, here are:

Peter Lynch’s 7 Rules of Investing
1. KNOW WHAT YOU OWN. Invest in companies, industries, and funds you understand well. What do they do? Who uses their goods or services? Is it a company you would want to do business with yourself?
2. PREDICTION IS FUTILE. No one can predict where the markets will go or what the economy will do, so don’t even try. Instead, focus on what you can control, like the types of companies or funds you invest in, how much you save, etc.
3. BEFORE YOU BUY, BE ABLE TO EXPLAIN. Before investing, can you explain to a family member what you’re buying and why? Can you describe how that company or fund works? If not, take your time and do more research.
4. AVOID LONG SHOTS. Investing isn’t gambling, either. While we have no control over the markets, we do have control over how much risk we take on. Your portfolio isn’t the place for speculation or bets. For that, head to Vegas.
5. BUY GOOD COMPANIES. Invest in companies that have proven management, a strong business model, and that sell things people actually use. Otherwise, you’re investing in companies you guess might prove popular…and that’s just another form of gambling.
6. LEARN FROM YOUR MISTAKES. Even the greatest investors sometimes get things wrong. When that happens, accept it humbly and try to determine how you can improve.
7. TAKE YOUR TIME. Investing isn’t a race. You have plenty of time to do your research and find outstanding companies to invest in. Follow the tortoise’s example, not the hare’s.

Ultimately, all investing comes with risk, and there is no strategy or rule that guarantees success. But there are solid “rules of thumb” you can follow to make smart, simple investment decisions. And best of all, you don’t need a PhD to understand them!

1 “The Greatest Investors: Peter Lynch” https://www.investopedia.com/university/greatest/peterlynch.asp

Most Popular Financial Stories

Significant Shrinkage

Significant Shrinkage Buffeted by Inflation Is it time to double check your household budget? Chances are the budgeted expenditures of the vast majority of Americans are about to get buffeted. Or so says the Oracle of Omaha. In the latest shareholder...

read more

How to Manage Your Money and Your Risk Exposure

This is an excellent example of one of our more popular client webinars where we detail what is happening in the market, what makes us so successful and different from other advisors, and how it effects our clients' portfolios.

read more

Forgotten 401Ks

ZombiesThey’ll eat you alive!Failure to Rebalance - Zombie Sign #1When was the last time you rebalanced your 401(k) or other retirement account? When you set it up, you took a fairly conservative approach and bought 60% stock mutual funds and 40% bond...

read more

Navigating Bear Market 17 & Covid19 Webinar

How Are Your Investments Doing Lately?  Receive A Free, No-Obligation 2nd Opinion On Your Investment Portfolio > This Webinar zeroes in on Technical Analysis and Active Management—two strategies that protect your assets in times of trouble. Our equity...

read more

Six Steps To Financial Independence For Women

Financial independence: Whether you enjoy it or dream about it, it’s a common term that you’ve probably seen in magazine ads, TV commercials and billboards. But what really does financial independence mean, exactly?Read more>>

read more

Active Portfolio Management – How We Do It!

Research Financial Strategies specializes in providing financial advice using a proprietary investment methodology that leverages technical analysis to identify and protect our clients against stock market risk. Research Financial Strategies provides our...

read more
LinkedIn
LinkedIn
Share
RSS
6Lc_psgUAAAAAA9c7MediJBuq3wAxIyxDSt73c9j