Famous investor Sir John Templeton has 16 rules for successful investment, his best tips on what investors need to keep in mind if they’re going to generate positive returns.

These tips provide a solid foundation for success for new investors and an invaluable supplement to existing investors’ knowledge of the market.

16 Golden Rules for Successful Investment

1. INVEST FOR MAXIMUM TOTAL REAL RETURN

This is the only rational objective for most long-term investors. It is vital that you protect purchasing power.

2. INVEST DON’T TRADE OR SPECULATE

The stock market is not a casino if you gamble, you may lose eventually or frequently.

3. REMAIN FLEXIBLE AND OPEN-MINDED ABOUT TYPES OF INVESTMENT

There are times to sit on cash and watch, because sometimes cash enables you to take advantage of investment opportunities. The fact is there is no one kind of investment that is always best.

16 Golden Rules for Successful Investment

4. BUY LOW

Buy when most people including expert are pessimistic, and sell when they are actively optimistic. Benjamin Graham

Never follow the crowd. Bernard Baruch

5. WHEN BUYING STOCKS, SEARCH FOR BARGAINS AMONG QUALITY STOCKS

Quality is a company that’s the technological leader in a field that depends on technical innovation. Quality is a strong management team and well-capitalized company.

6. BUY VALUE, NOT MARKET TRENDS OR THE ECONOMIC OUTLOOK

A wise investor knows that the stock market is really a market of stocks. All too many investors focus on the market trend or economic outlook. But individual stocks can rise in a bear market and fall in a bull market.

16 Golden Rules for Successful Investment

7. DIVERSIFY. IN STOCKS AND BONDS, AS IN MUCH ELSE, THERE IS SAFETY IN NUMBERS

Diversify by industry, by risk, and by country. For example, if you search you will find more bargains and possibly best bargains.

8. DO YOUR HOMEWORK OR HIRE WISE EXPERTS TO HELP YOU

Study and research companies to learn what makes them successful.  

9. AGGRESSIVELY MONITOR YOUR INVESTMENTS

No bull market and nor bear market is permanent. Expect and react to change.

16 Golden Rules for Successful Investment

10. DON’T PANIC

Sell your stock to find and buy more attractive stocks. If you can’t find more attractive stocks, hold on to what you have.

11. LEARN FROM YOUR MISTAKES

The big difference between those who are successful and those who are not is that successful people learn from their mistakes and the mistakes of others.

12. BEGIN WITH A PRAYER

If you begin with a prayer, it can clear your mind and you will make fewer errors during a trading session or in stock selection.

13. OUTPERFORMING THE MARKET IS A DIFFICULT TASK

The real challenge is making investment decisions that are better than those of the professionals who manage the big institutions.

16 Golden Rules for Successful Investment

14. AN INVESTOR WHO HAS ALL THE ANSWERS DOESN’T EVEN UNDERSTAND ALL THE QUESTIONS

An arrogant approach to investing will lead, probably sooner than later, to disappointment if not outright disaster. Everything is in a constant state of change, and the wise investor recognizes that success is a process of continually seeking answers to new questions.

15. THERE’S NO FREE LUNCH

Never invest on sentiment. Never invest solely on a tip. Do your homework first.

16. DO NOT BE FEARFUL OR NEGATIVE TOO OFTEN

There will, of course, be corrections, perhaps even crashes. But, over time, our studies indicate stocks do go up and up and up. Do not be fearful or negative too often.

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