Every day, we hear cases of people losing their hard-earned money because they made investment decisions carelessly. Many people just invest without understanding the base rules of investing.

Many people save money for many years only to lose it in fraudulent or loss-making investment vehicles.

Just imagine waking up early in the morning and going to bed late every day for 10 years to save something and then you lose the money through one poor investment decision?

This can break you no matter how strong you are. You have sacrificed so much to put away money in a savings account. You have denied your family and good life promising them a better one in the future and now, everything is gone.

These scenarios are very common. They happen every day. Thousands of people regret making investment decisions every day around the world.

Losing money is normal in the investment world. If you have never lost money, it means that you are not a serious investor. This is because losing is part of gaining.

I have lost hundreds of thousands in the investment world. This is not because I was not careful but because I made moves. I took the initiative to invest and I lost.

These are just a few scenarios. I have also made many good investments are reaped big. These gains have overshadowed the losses over time.

If you know what you are doing, the investment world will favor you.

Do not listen to all those risk-averse individuals who never do anything because they fear losing money. That is not the mindset of success.

Success calls for high risk because high risk equals high reward.

However, your risk has to be calculated. You do not just throw your money anywhere and anyhow and expect to win. You have to make educated decisions when investing.

These 6 rules of investing will guide you in your journey to success:

1. Never invest in anything before you invest in yourself

This is the cornerstone in the world of investment. You cannot afford to remain illiterate when it comes to investment.

When you listen to the greatest investors like Warren Buffet, you will notice that they have a sea of information about the area of investment. This is what they use to craft investment strategies and tactics.

They do not just understand key financial definitions but have gone ahead to master the topic more than all of us. This is why they win more than all of us.

You need to develop your financial and investment intelligence before you start injecting cash into different projects. If you do not, you will lose everything.

You can do this by taking an investment course. You can take certified financial analysis (CFA) courses or enroll for a diploma or degree in a local university.

You can also read books on the topic to gain more understanding. Books are written by experts and can be very insightful in your journey.

The intelligent investor by Benjamin Graham and Rich Dad Poor Dad by Robert Kiyosaki are good books to start with. We will give you a full list of these books in subsequent articles.

You can also make use of the vast information available on the internet. There are many blogs on personal finance and investment (This one is one of them). We upload new information every day.

2. Invest only in what you understand

There is a very high tendency of people just imitating what is working for other people. They think that because it worked for so and so, they should also put their money in the same project.

There is so much that goes into managing investment projects. You need technical knowledge to get success.

If you invest in stocks without understanding how they work, you will lose everything. You would rather continue investing in your area of expertise as you gain more knowledge in the new industry.

This is why investment focus is important; you get to become an expert at one thing at a time. After you become an expert, losing money will become rare.

3. Never put money in one investment project unless you are an expert

This is a mistake many people make. You should never put all your money into one project unless you are an expert in that area.

Many people lose money because they believed in a project so much and drained their bank accounts. They end up losing 10-years savings.

Before you become an expert at investing in a certain industry, you, always be paranoid and diversify. Diversification reduces the risk of losing everything.

If you put money into five projects, chances are that at least 2 or 3 of them will succeed. Even if 2 or 3 fail, the ones that succeeded will cancel out the loss to bring you returns.

After you become an expert, you can now start putting everything in one basket. Your knowledge and skill will have increased and losing will not be rare for you.

4. Never make emotional investment decisions

Sometimes, people become excited about an investment idea and they drain their bank account into it. They use emotions rather than logic when making investment decisions. This is how they end up losing money.

Investment decisions should be made logically and not emotionally. Emotional decisions lack rationale and logic. They are mostly based on mere excitement and not concrete reasoning.

Just because someone presented an idea in a motivating way does not make it a good investment decision for you.

There are many good salespeople out there who are so good at what they do that they can convince you to invest in something that does not make total sense.

They will excite you rather than educate you. After the excitement is over, you will come back to your sense but it will be too late. You will have lost money.

No matter who is urging you to invest, take at least a week to ponder over it. This will increase your chances of reasoning the ide out.

To be continued...