Basic investment rules - description, principles and recommendations. Golden rules of investing Rules of investing

When investing, most investors, and I also follow these investment rules. They have been developed over years of investment experience, through trial and error of a huge number of investors, and are formulated in a few paragraphs. I present these rules to you with my own explanations and comments.
I advise investors in their investments to ALWAYS and STRICTLY comply with the data

investment rules:

1. Determine what funds you will invest and allocate them from the general budget.

These will be your means to multiply.

They should only be used for investment, and not for other needs.

These investment funds will constitute the so-called "Contribution body".

2. Invest only those funds that you do not mind losing, the loss of which will not hit your budget.

It is considered optimal to allocate 10% of income for investments. Monthly, you can allocate this amount, find new companies on the Internet and invest.

Losing only 10% of income in the event of unforeseen risks will not be the collapse of a lifetime, and at the same time, investing 10% of income every month, in a year at an average deposit interest rate of 10%, which can be received in the Forex market, you there will be quite an impressive capital in the form of profit.
How to allocate 10% of income? Think about what you spend money on during the month, what expenses are superfluous, what among your expenses is not a matter of prime necessity. Wouldn't it be better to postpone unnecessary purchases, thereby saving a certain amount of money now, which you can invest in the future and make a profit, which is more than enough for purchases and for further investment.

3. Invest only your own free funds.

Simply put, this investing rule says directly:

Never borrow money for investments and never take loans for this purpose!

Whatever the tempting percentage of profitability in an investment company, none of the Internet projects is insured against risks. Yes, in the Forex market you can get a huge percentage of profit in a short time. But here is a double-edged sword, you can also quickly lose it under unforeseen circumstances .

If you lose only your own funds, you can recover lost losses much faster and easier than if you took out a loan and you will first of all need to repay the entire loan amount, plus interest for using the funds that you have already lost.

4. "Don't put your eggs in one basket."

It is better distribute your amount between several companies. This will greatly reduce your risk of losing everything at once, because. the probability of the collapse of all the companies in which you have invested at once is extremely low. (Although this cannot be ruled out in the world of the Internet).

Diversify risks by investing in several companies at the same time. Then possible losses in one company will be offset by profits in others and the average percentage of profit will remain the same.
You should not get hung up on one company, no matter how great you think it may be. Remember that the higher the interest on deposits offered by the company, the greater the risk.

And percentages of 15 or more most often offer projects that do not conduct real activities aimed at making a profit for the investor. Usually, interest payments there occur to the first investors at the expense of subsequent ones. That is, these are simple pyramids that do not live long. Therefore, check the companies for maintenance real activity.

5. Try to withdraw the “deposit body” as soon as possible, and then invest only interest.

Then you definitely save your funds, and you can increase them a lot.

6. Don't count on a 100% investment company guarantee.

No company, no matter what guarantees it gives, can be completely trusted. There are such force majeure circumstances and risks that no one, even the heads of these companies, can suspect. As a result of such circumstances, a hasty collapse of an investment project may occur without returning your investment funds.

To achieve the two main goals of investment, maximum return and minimum risk, there are some investment rules , observing which the investor will be able to achieve the objectives set for him.

First investment rule.

To begin with, each investor should decide what type of income he plans to receive. There are several types of income: - earned, - passive, - portfolio.

Earned income is the most common form of income today. This is the salary that a person receives for any kind of work. This type of income is the most taxed and therefore the most difficult to achieve financial independence with.

Passive income is income received by a person on an ongoing basis and does not require additional actions for this.

Portfolio income is the most popular and widespread form of income today. The investor receives profit from the purchase / sale of securities (stocks, bonds, etc.). It is the easiest to manage and maintain.

Second investment rule.

For novice investors, the basis of the basics will be the ability to convert earned income into passive or portfolio income as efficiently as possible. It is also important to preserve the value of earned income by buying, for example, a security that, according to the investor's expectations, should bring passive or portfolio income, in other words, a security that can grow in price in the future.

Third investment rule.

One of the most important investment rules, lies in the fact that everyone should be ready for any kind of changes in the market, and must be able to adequately respond to these changes.

The mistake is that investors themselves try to predict or plan for these changes. In other words, they guess what will happen and when, but they cannot influence the market. The market itself adjusts the ways of interaction of all its participants.

Fourth investment rule.

The next rule is the ability of the investor to assess the risks and rewards.

Before making any investment, you need to soberly assess all the risks that the investment project or an investment idea, as well as all the benefits that it can give you.

Assessment of this kind is carried out either independently or with the help of professionals.

Basic investment rules say that never, under any circumstances, an investor should carry out in those objects in which he does not understand.

An investor should never invest his last or borrowed funds.

Never invest based on a single opinion or judgment.

Never invest if you are forced to.

Competent and profitable investment of funds is an art that involves a responsible approach. A set of rules for novice investors will help you navigate the fundamental positions and prevent unreasonable risks. These are universal recommendations for beginners, which will be useful in further professional activities.

Rule 1. Study of the object

In the variety of investment market offers, it is important to highlight the best options in a particular particular case. Each considered investment object, for example, real estate, should be evaluated according to the criterion of risks, profitability, availability, profitability, liquidity and relevance. High scores on a single item are not enough.

For a competent choice, it is important to evaluate the characteristics in the aggregate. Infographics, statistics, analytical articles, comparative characteristics, general dynamics of the segment development help with this.

Given the risks of fraud, signs of financial pyramids should be taken into account. Among them are aggressive, overly intrusive advertising, a multi-level affiliate program, the promise of high income with minimal risk, a lack of history of activity and positive feedback.

Rule 2

In commercial activity, there is the concept of entrepreneurial intuition. But the strategy of any business, focused only on this point, with a high probability leads to the destruction of expectations. In pursuit of the maximum, guided by emotions alone, you can be left without anything, while the actual calculation often leads to stable averages.

Rule 3. Competent distribution of the investment portfolio

The golden rule of investors of any level is the inadmissibility of investing all funds in one project or site. There is another extreme - the dispersion of assets into many untested options. Practice shows that the golden mean is an investment project with 3-4 positions, half of which must be with minimal risks, and the rest are reasonably promising start-ups and directions.

An example of good, proven assets in most cases is and. The current trend with increased risk is cryptocurrencies and. In this context, a portfolio with a ratio of 25% to each position can be called appropriate.

Competent diversification necessarily implies the use of conservative investment methods in a ratio of at least 40% of the total volume. Moderately risky methods and frankly aggressive injections of funds (options, futures) should be correlated in proportions of 30-40% to 10-20%.

Rule 4 Planning activities

The investment plan allows you to specify the goals and determine the desired result. Without a strategy, it is difficult to ensure orderliness and expediency of actions. Planning outlines the final target (accumulating a pension, increasing income by 20%, buying real estate abroad, receiving passive income, etc.), sets a deadline and ways to achieve it.

Based on the goals set, ways to achieve them are formulated, a step-by-step algorithm of actions is drawn up.

For example, the intention to earn one million can be realized by saving 400 monthly and investing at 20% for 7.5 years. Such profitability is available when investing in mutual funds, buying luxury real estate in a facility under construction for the purpose of subsequent leasing.

Rule 5 Calculation of losses and risks

Investing in any format comes with risks. Their degree differs depending on the direction, but there is no absolute guarantee of obtaining the desired benefit. It is important for an investor to predict possible losses and assess the degree of their significance.

It is impossible to avoid risks, but investments should be comfortable. That is, when directing free funds, one should calculate what will happen to business, family, hobbies and life in general if this money becomes irrecoverable. Any loss is tangible, but you should invest only the amount, the loss of which will not be critical.

For example, a beautiful yield chart does not guarantee subsequent successful trades and protect assets from failure. To implement this rule, it is important that the thought of possible losses prevail over the calculation of the amount of lost profits.

Rule 6. Use of own funds

It is forbidden to invest borrowed funds at the first stages. This is an axiom for any financially literate person. Such risks can only be allowed by the gurus of their business with a successful set of circumstances and extensive experience.

The essence of investing is to preserve and increase funds, and not to create debt bondage. Therefore, the actions of novice investors should be based on the principle of expediency and reasonableness.

Rule 7. Search for new options and relevant directions

Serious investment activity is associated with "hype" directions and current trends. In modern conditions, the use of exclusively conservative methods will not allow you to significantly enrich yourself. A competent balance of traditional and alternative directions is important.

The development of the Internet space dictates its own conditions. Leading investors around the world cannot ignore the cryptocurrency market, the presence in which opens up unlimited opportunities for enrichment. The degree of participation can be different - from creating your own cryptocurrency and large mining farms to the periodic acquisition of altcoins with the prospect of growth and exchange trading. A good example of success is the first bitcoin millionaires.

Rule 8. Cooperation with professionals

Partnership in investment activities should be based solely on the principle of reliability and professionalism. The direction doesn't matter. If you buy a property under construction - only a proven developer with a reliable reputation. When concluding an agreement with a broker, you should pay attention to its legality, the duration of its presence on the market and the realistic conditions.

The choice of a financial institution for the placement of capital should be based on business reputation, the availability of official permits and, in the best case, the presence in the top of the country's leading credit institutions. A vigilant approach and adherence to the principle of reasonableness will avoid unnecessary losses and risks.

Congratulations on joining UVCA. Why did you decide to join the association?

I want to learn more about Ukraine, the local venture capital and private equity market, and get to know the IT community. Membership in UVCA is the best way to do this. Especially considering that I was honored to be a member of the Board of Directors of the Association.

My office is in Santa Monica, California, where the Ring startup bought by Amazon is based. It became very successful, which is also due to Ukrainian technologies. Several of my clients work with Ukrainian IT specialists. When we heard about the high quality talent in Ukraine, we were curious to find out more about them. At the same time, I have several clients from Poland, which means that we are already working with countries on the border with Ukraine. I think that there is a high potential in Ukraine as well.

To our knowledge, Orrick is an international law firm that specializes in providing services to technology, energy, infrastructure and finance companies around the world. How many clients contacted you in 2017 and who are your clients?

As you correctly noted, technology, energy, infrastructure and finance are the main sectors in which we operate. We have represented over 1,800 technology companies and about 100 VC firms. In 2017, we represented technology companies in 650 venture capital funding rounds, raising over $12.7 billion in 30 different countries. We have represented over 20% of unicorn startups. We have been honored to represent renowned companies such as Pinterest, Stripe, Asana, Warby Parker and Revolut.

What questions do you usually face? For example, do you provide transactional advice, handle litigation or resolve compliance issues?

Orrick is primarily a global legal services firm, so we handle a wide range of issues, from litigation and transactions to regulatory issues - a full range of legal services. As a corporate lawyer, we pay special attention to supporting entrepreneurs in the early stages. Personally, I accompany companies at all stages of their life: from creation to exit. We assisted in negotiating and closing deals, in particular, venture financing, mergers and acquisitions, and public offerings (IPOs). For example, we represented PlanetLabs in their acquisition of Tera Bella from Google.

Let's talk about M&A transactions. Your landmark accomplishments were the startup Yes in its acquisition by Twitter, and Compellent Technologies in its acquisition by Dell for $940 million. What are the golden rules for a successful M&A deal?

Every deal is different, but there are a few key factors. All M&A transactions represent the valuation of a private company, whose value is not fixed due to the lack of so-called state pricing. If you are a seller, you should not be afraid to negotiate. The buyer will name his best price in the first offer. If you don't like it, you can make another offer, and then he can accept it. You never know until you ask!

What is the secret of successful M&A negotiations?

It's all about the negotiation strategy. You may have more than one potential buyer. For a seller, the more buyers, the better terms for a deal you can get. Having an alternative is the way to a better strategy.

However, sometimes M&A deal negotiations take a very long time. For example, in most cases, it is possible to close the process only after a few months. Unfortunately, time ruins all deals. Therefore, you must be careful when a deal is characterized by lengthy negotiations and preparation.

The reason for this is often the Due Diligence process. The buyer must follow the procedure, examine all records and contracts, client charges, etc. To save time, you can conduct Due Diligence in advance. Keep documentation in order and resolve any issues in a timely manner. Thus, you will prevent problems and answer due diligence questions before the buyer. This will speed up the process and ensure that the deal is closed on time.

However, if you are limited in time, the other party may use it against you. For example, if they know that you have to close the trade in exactly two weeks, they may try to slow down the process in order to force you to give up at the last minute in order to close the trade on time. Sometimes it's worth playing it safe so that people don't use time against you.

How do you assess the Ukrainian M&A and VC market?

You know, very promising. As I mentioned, there is a lot of talent here. Having a strong team is key, especially in the early stages of a startup's life. Ukraine has a young ecosystem, but there are already several successful cases like Grammarly. By the way, many talk about how promising their products are. It looks like there is a huge potential in Ukraine. I will study the Ukrainian ecosystem and companies. I have already managed to get acquainted with some Ukrainian companies through the UVCA network.

What would you advise Ukrainian companies?

1) If you are planning to attract foreign capital, establish a Delaware corporation. This type of institution is the most familiar and familiar to invest. At Orrick, we have represented several hundred companies around the world and often assisted them with US deployments. If you are not located in the States, this does not mean that you cannot form a corporation. We often help customers solve this problem.

2) Be very careful with the capitalization of the company, including the share that you give to your team members or other people. You need to be very judicious about who and how much you give. If you give away too much too soon, you will lose your influence as a founder. You may have no reason to stay with the company in the long run, which will create problems for the company itself. You must exercise caution and restraint in managing capitalization and how you allocate portfolios. For example, you can get advice from a third party or simulate a capitalization table to make a forecast for the future.

3) The founders must be very thoughtful in the process of distributing capital among themselves. Quite often they divide it in half. This seems to be fair, but over time does not reflect the real state of affairs in the company. Some founders sacrifice more and take on more responsibility than others. The lack of a proper model for allocating capital between co-founders can lead to discord among investors and other problems in the long run.

How about investors? How can a startup choose the right investor?

There are many types of investors. In the early stages, you are dealing with an angel investor. He gives you the first capital, but does not have to control your every move. Once you've made it to the seed stage, you can grant the investor a little more rights than the angel investor.

A venture investor is the most expensive capital, because it has the most rights, including control. You can provide him with reporting, the right to retain your percentage of the capital and even the right to veto, as well as other rights and protections.

You have to be careful when choosing an investor, because it's like marriage - you will be together for a very long time. It is necessary to choose someone whom you trust and who is of value to you in addition to capital: for example, special knowledge, experience, connections, etc.

Many do not understand that success in the financial sector is not achieved due to momentary luck, but due to systematic movement forward over a long period of time. And very few people know about the 4 main rules of successful long-term investments.

Is there an absolute guarantee of stability of success

Nobody is immune from bankruptcy. This trouble can affect any, even the most famous and successful company.

Consider Enron, an American energy corporation with a host of ambitious projects. For more than 6 years, it has been considered the most innovative company in America, according to Fortune magazine. However, in 2001 it went bankrupt.

How did it happen? After all, the leadership should have foreseen that their brainchild was about to collapse.

Not so simple. In the case of Enron, it turned out that the company's financial information was distorted by fraudulent accounting practices. The company's management has created thousands of legal entities - offshore. Electricity transactions were carried out through the subsidiaries, and doubtful debts were passed on to the same subsidiaries. Enron's financial analysts were professionals, but this did not save her from misfortune. Therefore, there is no absolute guarantee of stability of success.

But, can you save yourself from financial ruin? We have tried to answer this question below.

1. Diversify

What types of investments can be

Your investment portfolio must contain different instruments:

At different times, assets can behave differently. Today the stocks “shot”, tomorrow the quotes collapsed, but gold went up. Diversification allows you to achieve some stability in terms of income and avoid catastrophic failures.

Diversification Mistakes

Some mistakenly believe that the more instruments in an investment portfolio, the better. In fact, this is not the case: the more tools, the more difficult it is to control them.

2. Timely withdrawal of the "body" of the deposit

Let's say you had a starting capital of 100,000 rubles. You invested this amount in one project, and in six months it doubled. So, on your balance sheet there is now an amount of 200,000 rubles, of which 100,000 rubles is net profit. This means that you can withdraw your first investment with peace of mind, leaving only net profit in the project. In this way, financial risks can be significantly reduced.

3. Use exclusively "working" capital

Divide any income into 3 parts:

1. main- the money that is needed for primary needs (utilities, food, clothing, etc.);
2. working- the amount of money that you are going to invest in any project;
3. funded- everything that could be postponed.

Fixed or accumulative capital should not be used for investment! Only a worker can invest in projects for profit. The money received by investing should not be spent, but invested in other assets.

4. Require Factual Proof of Performance Before Investing

Now there are a lot of scammers around, eager for easy money. Contextual advertising on websites either encourages us to “successfully” invest money somewhere, or “profitably” buy something. And everyone will assure you that it is his project that is a win-win option.

Before making any decision, ask for some evidence of the profitability of the business in which you are offered to invest. For example, screenshots of the receipt of money. If there is no evidence, in no case do not let yourself be drawn into a dubious adventure!

20 Rules of a Successful Investor

In addition to the 4 basic rules listed above, there are other rules of successful investors that you should follow:

No one can give a 100% guarantee of success. However, if you follow certain rules, calculate in advance possible risks, potential profits and carefully study projects before investing in them, you can ensure yourself a good start in investing.