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Investing For High Returns At Low Risk

Jun 23, 2008
Is investing risky? The answer is, it depends. The risk in an activity very much depends on the level of competence of the person doing that activity. For example, is it risky to drive a car? Well, if you have never gone for any driving lessons and have no idea how to read road signs, engage the gears or to use your side-view mirrors, then there is a high chance that you could get yourself badly hurt or even killed. However, if you have a thorough understanding of how to drive well, then driving is a low risk activity.

Similarly, investing is risky when you don't know what you are doing. The scary thing is that the majority of people who invest their hard earned money in the stock market do not know what they are doing. Many people who buy shares of companies have little or no knowledge of how to invest. They are like that driver who has no clue about how to work the gears or the rules of the road. This is because you do not need to take a license or be qualified to be an investor. Just about anybody can do it!

Most amateur investors do not even have a basic understanding of the economic cycle and how interest rates and oil prices affect the global economy & the stock market. They have no clue as to where and how to read financial reports that will impact the stock markets. Most have very little financial & accounting knowledge and do not know how to value the worth of the company's shares they are buying. In fact, I am often shocked when I hear of people who invest in a company without even understanding what business the company is involved in, let alone understand the company's business strategy.

In the highway of investing, over 70% of investors (mostly the general public) are driving around without the basic skills of motoring! This is why many of them crash and burn their hard earned money. For the majority of people out there with little financial competence, investing is truly high risk and maybe high return (depends a lot on blind luck). To me these people are not investors but gamblers. For such people, I would strongly advise them to learn how to drive or to leave their money in the bank or under their pillow!

When you have a thorough understanding of the stock market & the rules of investing, then investing is no longer risky! When you know exactly what you are doing, you can achieve extremely high returns, with very low risk! In fact, it may surprise you to know that the greatest investors in the world are NOT risk takers. They are in fact, very risk averse. It is because of their strong financial competence and thorough understanding of the stock market and business that they are able to achieve very high returns, at very low risks.

Warren Buffett, the world's greatest investor, who achieved 24.7%, returns per year for the last 49 years is known to be extremely risk averse. His Rule #1 in investing is, "Never Lose Money". His second rule in investing is, Don't Forget Rule #1, I follow the exact same philosophy. Again, many people perceive that because of the businesses I have started and the investments I make, I am a risk taker. In reality, I too am risk averse and security is one of my highest priorities. However, because of my financial intelligence, I am able to confidently identify and invest in stocks and business where I have a 95% chance of making a high return and even if I am wrong, the loss is minimal.

By understanding all my concepts and strategies that I will share, you too will be able to confidently achieve a high level of returns from your investments with very little risk. While the rest of the crowd have chosen to walk (because of the fear of driving on the highway of investing), you will learn how to read the financial road signs and to confidently drive the vehicle of wealth and accelerate towards your financial goals!
About the Author
Adam Khoo is an entrepreneur, best-selling author and a self-made millionaire by the age of 26. Discover his millionaire investing secrets and claim your FREE bonus chapter of his latest bestselling book 'Secrets Of Millionaire Investors' at Secrets Of Millionaire Investors.
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