Master the Six Basic Rules of Investing!

Investing is a long-term game that requires discipline and knowledge. It is important to understand the different types of investments and how they work in order to choose the best one for you. The six basic rules of investing are: change the way you think about money, know what kind of income you are working for, turn regular income into passive income, the investor is either an asset or a liability, good deals bring in money, and learn how to weigh risk and reward. Changing the way, you think about money is the first step to investing. Poor and middle-class people think they can get rich by working for a salary, but the tax code is set up to favor business owners and investors, who can invest money before taxes are taken out and have more control over their investments. There are three types of income: ordinary earned income, portfolio income, and passive income. Ordinary earned income is what most people think of when they hear the word “make money”, but it is the hardest way to build wealth because of how much is taken out of your paycheck. Portfolio income is usually from a 401(k) and other paper assets like mutual funds managed by a financial advisor. It is taxed at the second-highest rate and could be better for building wealth because it doesn’t bring in much money. Passive income is money you get from something you don’t have to work for. It is taxed the least and has the most tax breaks, and is the easiest way to build wealth. The fourth rule is the investor is either an asset or a liability. If you know very little about money but still want to make big investments, you will make many mistakes that investors with a high financial IQ will use to their advantage. To become a good investor, you should first invest in your financial education and start with small investments. The fifth rule is good deals bring in money. If you are ready, educated, and have experience and find a good deal, the money will find you. The sixth rule is to learn how to weigh risk and reward. It is important to consider the potential risks and rewards of each option you are considering, the time horizon, diversifying your portfolio, having a plan for managing risk, and being prepared to adjust your strategy. Overall, mastering the six basic rules of investing will help set you up for success. It is important to stay disciplined, diversified, and patient in order to make informed decisions and be successful in the long run.