The Law of Investing

The Law of Investing
By: Brian Tracy

The Law of Investing -
Investigate before you invest. This is one of
the most important of all the laws of money. You should spend at
least as much time studying a particular investment as you do earning
the money to put into that particular investment.

Check Every Detail
Never let yourself be rushed into parting with money. You have worked
too hard to earn it and taken too long to accumulate it. Investigate
every aspect of the investment well before you make any commitment.
Ask for full and complete disclosure of every detail. Demand honest,
accurate and adequate information on any investment of any kind. If
you have any doubt or misgivings at all, you will probably be better
off keeping your money in the bank or in a money market investment
account than you would be speculating or taking the risk of losing it.

Money is Easy to Lose
The first corollary of the Law of Investing is: "The only thing easy
about money is losing it." It is hard to make money in a competitive
market but losing it is one of the easiest things you can ever do. A
Japanese proverb says, "Making money is like digging with a nail,
while losing money is like pouring water on the sand."

The Best Rule of All
The second corollary of this law comes from the self-made
billionaire, Marvin Davis, who was asked about his rules for making
money in an interview in Forbes Magazine.

He said that he has one simple rule and it is, "Don't lose money." He
said that if there is a possibility that you will lose your money,
don't part with it in the first place. This principal is so important
that you should write it down and put it where you can see it. Read
it and reread it over and over.
Time Equals Money
Think of your money as if it were a piece of your life. You have to
exchange a certain number of hours, weeks and even years of your time
in order to generate a certain amount of money for savings or
investment. That time is irreplaceable. It is a part of your precious
life that is gone forever. If all you do is hold on to the money,
rather than losing it, that alone can assure that you achieve
financial security. Don't lose money.

Be Smart About Investing
The third corollary of the Law of Investing says: "If you think you
can afford to lose a little, you're going to end up losing a lot."

There is something about the attitude of a person who feels that he
has enough money that he can afford to risk losing a little. You
remember the old saying, "A fool and his money are soon parted."
There's another saying, "When a man with experience meets a man with
money, the man with the money is going to end up with the experience
and the man with the experience is going to end up with the money."
Always ask yourself what would happen if you lost one hundred percent
of your money in a prospective investment. Could you handle that? If
you could not, don't make the investment in the first place.

Action Exercises
Here are two things you can do to apply this law immediately:

First, think back over the various financial mistakes you have made
in your life. What did they have in common? What can you learn from
them? Accurate diagnosis is half the cure.

Second, invest only in things that you fully understand and believe
in. Take investment advice only from people who are financially
successful from taking their own advice. Play it safe. It's better to
hold onto your money rather than to take a chance of losing it, along
with all the time it took you to earn it.