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Top 5 – Good Rules of Thumb for Investment


The process of investing can be intimidating and complex, full with risks and unknowns. Having a set of reliable principles can make all the difference, regardless of expertise level, in decision-making. There isn’t a single, effective way to invest, but there are universal principles that have stood the test of time. These principles can be a good starting point for creating an effective financial strategy. Let’s examine the top five good rules of thumb for investment and how they could support you in achieving financial success.

The guidelines emphasize the importance of making informed decisions, managing risks effectively, and maintaining focus on long-term goals despite market fluctuations. They address various topics, including diversification, patience, and discipline. By following these guidelines, you can make wise investment choices and achieve your financial goals, whether you’re saving for retirement, growing your wealth, or simply keeping cash readily available.

Top 5 – Good Thumb Rules for Investment – Overview

As people mature, they come to realize the significance of investing for their future. Today, one of the most commonly searched topics on the internet is “Rules of Thumb or guidelines for building wealth.” Let’s delve into a fundamental thumb rule for wealth building. If you grasp and apply five basic principles successfully, you can yield substantial returns on your investments. Here are the 5 thumb rules for investment and building wealth in financial markets such as stocks, futures, options, Forex, or any other market:

  • Rules of Thumb: 1 – Save money regularly.
  • Rules of Thumb: 2 – Learn the basics of investments.
  • Rules of Thumb: 3 – Identifying investment options.
  • Rules of Thumb: 4 – Diversify your investment.
  • Rules of Thumb: 5 – Review your portfolio periodically.

Top 5 Rules of Thumb for Investment

This essay will explore the top five thumb rules for investment. These rules are based on tried-and-true strategies and solid ideas. Investors can confidently and cautiously navigate the erratic and sometimes violent world of financial markets using these key ideas.

Save Money Regularly

First two rules are very simple and straight forward, First and foremost target should be to control or cut your expenses and start saving money regularly. Small income amount saved periodically can help you to build a surplus wealth for investing in few months or years.

Learn the Basics of Investments

Second thing is to learn general fundamentals of investing. Under basic learning’s you should understand concepts like inflation, risk, investment options, power of compounding, investment plans, etc. Grab the basic knowledge of how your money can work for you, for this you can read articles, blogs or our financial tutorials and definitions if you haven’t read yet.

Identifying Investment Options

The third rule is extremely important. The first two rules will assist you in understanding the third rule. Rule 3 help in picking the right investment at the right time. To avoid mistakes in the third rule, one should proceed step by step. Begin by drawing your plan on a piece of paper. Then, draft your financial plans. Seek expert opinions on investment. Evaluate the investment’s worth. Identify the right time for investment. Assess potential risks.

List the pros and cons of your investment choices. Once you’re ready to begin, give your best effort. Aim to be on the winning side of this investing game. Warren Buffet, a billionaire investor, emphasizes understanding the business model, day-to-day operations, and revenue earning potential of a company. If you’re not familiar with these aspects, it’s best to avoid investing in it. This principle applies to all investors.

Diversify your Investment

Rule 4 of the thumb rule says ‘diversification’, which means to be a smart investor you have to make diversified financial plans. Always remember never to invest every single dollar into one stock or one fund, since it may be a huge risk for your portfolio. Investment returns are subject to market returns neither two companies work in the same way nor their returns are same. If one of the assets fails to move for certain duration, in that case if you hold other assets then you can fulfil your expected returns on your portfolio.

Review your Portfolio Periodically

Last rule that is rule number 5 says that ‘Review your investments’. Now that you have diversified stocks in your portfolio, keep reviewing your portfolio at regular intervals. This will assist you to remove non-performing assets from your portfolio and hold best return stocks or funds merely.

For example: You have 10 different stocks in your portfolio and after some months you get to know that one of the company from it has incurred massive and need to pay huge amount of penalties against lawsuits. In such circumstances you can remove that stock from your portfolio and identify other good performing assets for investment.


Every other investor who wants to start investment has to undergo five good rules of thumb for investment. Investing without knowledge or partial knowledge is harmful. You should know every detail about your selected investment. History reveals that people with lack of knowledge ruin their portfolio or end their life in extreme scenarios by preferring to make fast money with the help of tips.

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