The Seven Questions Every Investor Needs To Answer

The Seven Questions Every Investor Needs To Answer
By James Delrojo

Most people invest with the aim of making a profit but of course making a loss is always a possibility. To help you make the best investment decisions there are seven questions that you need to be able to answer. Your answers will much better equip you to make profitable investment decisions.

Most people hate making decisions. They stall and stall until in the end the decision makes itself. This is a great strategy if your aim is to bob along on the wave of chance, but how many people do you think really get rich by chance? The self made rich, the successful investors and all people who are in control of their own life, take that control by developing the habit and skill of being a good decision maker.

In order to make a good investment decision in regards to investing you need to be able to answer these seven questions.

Question 1: What is most likely to happen?

In order to answer this question you need to understand what drives capital growth in that particular form of investment. If you don't have this knowledge it's time to invest in some appropriate education before you risk your money.

Question 2: How can I best capitalize on that?

Every market is constantly a mixture of opportunities and difficulties. The trick is being able to recognize the opportunities. Opportunities that are obvious to an expert investor are often invisible to a novice or intermediate level investor. Recognizing opportunity comes from a combination of knowledge, experience, and creative thinking.

Question 3: What could go wrong?

Optimists often lose their money because they never look at what could go wrong. On the other hand pessimists see so many potential problems that they are too afraid to invest and so make no profit. It is important to learn how to switch between the two states as required.

For question 3 you need a degree of pessimism. Make a list of all the things that could reasonably go wrong with the particular investment that you are considering.

Question 4: How can I manage that risk?

Not investing because there are risks involved is a sure way to stay broke. Every investment (and every business) has risks. Experienced investors will invest if they can manage the risks within their decided tolerance levels. If not, they look for a different investment.

Question 5: How will I cash flow this investment?

Capital growth can make you rich but cash flow is the king. I have seen many unskilled investors lose money because they are so focused on the capital growth potential of a particular investment and forget to assess whether they can cash flow it during the time it take for capital growth.

This is particularly true with high growth residential property that often has low rental yield and therefore requires cash input each month to meet the loan repayments. Don't get in over your head.

Question 6: What will my strategy be in the event that I am right in my assessment?

Collect profit and minimize losses is a wise motto for investors.

If you are right in your assessment and all goes well with your investment then how and when are you going to collect your profit?

Question 7: What will my strategy be in the event that I am wrong in my assessment?

Even the most experienced investor can make an incorrect assessment and invest when they should have declined. For this reason an experienced investor designs an exit strategy BEFORE he or she invests. Then if the investment goes the wrong way they already know what to do.

Get good at answering the seven questions and your net worth will reap the benefits.

James Delrojo would like to help you by giving you his
ebook "Unleash the Success Power of Your Mind"
(valued at $27) completely FREE.
Go to http://www.YourSuccessMind.com

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