Kevin O’Leary’s Top Rules On Investing

Have you ever thought about investing your money before? You have probably heard a lot of people talking about investments before, but may not know if it is worth getting involved in investing yourself, or even how to get started in investing if it does end up being something you want to do.

It is a gross misconception that only those with bunches of money to spare can invest in stocks and bonds. With the right background knowledge and tips, anyone can start investing and yield amazing results in the process. Investing requires some strategic planning, but if done correctly, is worth the effort in the long term.

Take advice from Kevin O’Leary, television personality, entrepreneur and investing extraordinaire. You may know him best from Shark Tank, but he has worthy financial advice for everyone, even those who want to start investing their own money but have no idea where to even begin. Here are O’Leary’s top rules on investing.

Put the percent of your wealth into bonds that matches your age

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According to O’Leary’s advice, you should invest a specific percentage of your wealth into bonds that yield a steady income. If you are 30 for example, you would ideally invest 30 percent of the income you hold into bonds. So if you are 30 and you make $60,000 annually, you would invest $18K into bonds.

If you do not know much about bonds, there are a few major benefits that make these kinds of investments worth it. For one thing, bonds yield higher interest rates than keeping money in a savings account at your local bank, at least in the long term. The income you will generate from bonds is also predictable, unlike stocks, which can rise or fall significantly in just a year’s time.

Here is everything you need to know about investing in bonds and how you can start dedicating a portion of your income to smart investing. The key takeaway here is to not wait: if you have been thinking about investing but haven’t yet, do it now. The longer you invest, the more you will be able to gain throughout your lifetime.

Never put more than five percent of your wealth into one single stock

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In comparison to bonds, stocks will always end up yielding more in the long term than bonds will. However, according to O’Leary, you should never put more than a very small percentage of your wealth into one stock. Not only is it unsafe; it just is not a smart investment move to make.

If you put all your investment money into one stock, you will spend less money and could end up doing well from that one stock. But you could also end up losing the money you originally put in as well. However, if you put money into a variety of different stocks, it is much more likely that you will earn more, despite spending more at the start from investing in more than one stock.

Learn how to start investing in stocks even if you do not have much money to spare. This can be an intimidating process because, as many experts will tell you, investing in stocks is risky. Learn what you need to know about the stock market before you invest and always keep tabs on your investments.

Only invest in stocks that produce a dividend

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O’Leary advises that when you are learning the proper ways to invest, you should know firsthand that it is in your best interest to invest in stocks that produce a dividend instead of tangible funds.

This basically means you should only invest in stocks that yield more shares in stocks than actual cash. If you invest in stocks that yield dividends, you will be able to make much more from those increasing shares over time. Some stocks, depending on the day, will yield higher dividends than others, which is not actually as confusing as it sounds. You can visit this site to check up on the socks with the highest dividend yields.

Invest on instinct, but invest smart

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You should only invest in the things and in the manner that feels right to you. Do your research, learn what the experts do, keep track of best practices, but apply everything you learn to your own investment strategy. Develop a plan that works for you and meets your personal financial goals and matches up with what you want to invest, instead of always going by the numbers someone else might suggest for you.

Always keep in mind that investing is not a way to make an instant fortune, so this is not something to do if that is your end goal. The smartest way to invest is to give a percentage of what you earn into investing each year and keep those earnings tucked away to accumulate interest. The monetary results of these practices will begin to show eventually, over years, not weeks or months.

If you take anything away from O’Leary’s top rules for investment beginners, let it be these things:

  • Start investing as early as possible. The longer you keep your money in stocks and bonds, the more you will be able to earn later in life. Results may not be instantaneous, but if you don’t delay, your efforts will literally pay off.
  • Diversity the stocks you invest. Invest in more than just one stock, even if it means spending more money at the forefront.
  • Always be on the lookout for high yielding dividends. The more shares you hold, the more likely you are to make more money off of your investments, which is usually the end goal.

With the right tools, rules and background knowledge, anyone can start investing in order to obtain a little financial security from sources of income such as investing in stocks and bonds. If you follow O’Leary’s advice for investing, and apply that advice to a personal investment strategy that you develop for yourself, you will find success in investing, no matter how intimidating it might seem at first.