There are a couple of my investing principles below. They are not all my principals, but a starting point. I recently wrote them on a forum and wanted to transfer them here.
- Look for asymmetric bets – You want to find something with a high upside with a limited downside. The more you understand the asset, the easier it will be to find these opportunities. IE own business, value stock with a margin of safety, crypto (a controversial one
) - Protect your principal – When you lose 50% of your money. It isn’t a 50% return to get it back. It takes a 100% return to get go back to neutral.
- If you are losing sleep, you have too much capital at risk in a particular investment – Work to get a bigger low-risk buffer, understand the investment more, or your internal psychology.
- Invest for the longterm – Always have a long-term mindset with investing. You buy assets to hold forever but need to keep reassessing the conditions. A three-year plan for investment and life planning is a good time horizon. Farther out, your prediction probability decreases, and no one can predict the future. IE big life event could occur marriage, kids, death of a loved one, engage in a new business area, economy fundamentally changes, the list goes on…..
- Cash flow is king (especially with RE) – whenever you have a buffer, it will help give you a safety margin.
- I prefer to have an emergency fund for a year of expenses – This depends on the person. It includes an “everything went wrong plan”.
- Good investing principles and frameworks can be applied to multiple life areas: time, capital, relationships, etc.
helpful podcast and articles I learned some of these in case anyone is interested:
Emergency fund buffer and money anxiety – Two simple calculations to cut your money anxiety by 50% | RadReads
The time horizon and applying investing to multiple areas of life – The Random Show — Bitcoin Pros and Cons, 2021 Resolutions, Fave Books, Lucid Dreaming, Couples Therapy, and More (#493)