These simple rules have stood the test of time when it comes to investing. Savvy investors have been glad they never ignored any one of them. You too can be reap by making them your guide whenever you want to make an investment decision. 1. Avoid the temptation to run with the crowd: The crowd tends to get whipped into frenzy ahead of an earnings announcement, while investors buy based on their positive expectations. The theory of contrary opinion says that, “the crowd will always be wrong.” Due to our human nature, we will always try to ape what seems to be working well for our neighbours. Make it your action to buy when everyone is gloomy and sell when they are happy. Savvy investor Warren Buffet always advises investors to watch the tide but not the waves. Look for the under-appreciated opportunities. Keep an eye on companies with low investor expectations headed into earnings. Keeping with the same mindset as rule number one, low expectations are easier to beat. And when they are, we tend 10 see investors move in and drive prices higher. 2. Not investing at all: “If you wait for me perfect opportunity, you'll never get anything done.” These are the words of a great philosopher. Most of us 'plan' to start saving when we get that long awaited promotion. However, spending habits are just like a lion's cabs. As they grow up, they change from just suckling to taking meat of prey hunted down by their parents. The same case with our expenditure, the more we earn, the more the craving to move to a better house, posses a flashier phone or drive the latest model of a car. Keep in mind that the longer you wait to start saving, the more you'll have to save later in life to meet your financial goals. Thanks to the magic of compounding, the cost of not investing can be enormous. Let us say for example you begin investing at age 25, plan on retiring when you hit 65, and contributing US$l00, 000 in the first year with a moderate return of 10 percent annual return. Forty years later, your wealth will have grown to more than US$45, 000, 000. But if you wait until you are 30, US$l00,000 accumulates to only US$27,000,000. Waiting just five years to invest cuts your nest egg by a whooping 40 per cent. Given the math, it pays start saving now. Investing without plan: Avoid a mismatch your horizon and how you're actually investing. Your investing strategy ought to be dedicated by your profile. If you are in your twenties to the late thirties, you are better off tilting your portfolio heavily in stocks. Since you are saving in the long haul, equities offer higher returns than bonds and at this age you have the time advantage on your side. Although they're more volatile, you have plenty of time to rout the bumps. As you move into your mid-forties, shift your portfolio towards bonds, which are less volatile and good for your dropping tolerance for risk. 4. Looking for super phenomenal returns: A few years back we saw investors selling their holdings to join pyramid schemes veiled as investment clubs. No one seemed to have paid heed to the saying that when the deal is too good, think twice. Here were schemes offering to double your principal after a month by investing “offshore or in unexplained high-yielding instruments. Members roiled to note that these characters were using cash inflows from payments by new members to finance maturing claims. This was a snort lived rip-off which was bound to explode sooner than later. The dreams of high returns went up in smoke with the principal amounts. 5. Failing to review your portfolio: By design, financial plans are supposed to be pretty low maintenance. Don't waste precious time worrying about your holdings daily. But at the beginning of every year, spend time with your financial planner or adviser reviewing your portfolio. Be sure that the asset allocation you have decided on still reflect your needs and tolerance to risk. Even if you are still comfortable with your overall plan, you might need to do some tweaking - this simply means restoring balance to your portfolio by trimming your better performers in favour of the poor ones. Say, for instance, you have decided to keep 80 percent of your holdings in stocks, with the remainder in bonds. If the former outperforms the latter for a long time, the portion of your portfolio in stocks will end up being eroded courtesy of stock market cycles. 6. Advice from wrong people: Today, there are many 'analysts' and 'financial advisers'. Always seek help from people with the right qualification and experience. Any investment adviser should either be a Certified or Chartered Financial Analyst or pursuing the qualifications or a Certified Financial Planner. 7. Borrowing on your portfolio: Taking a loan on your portfolio is one of those things you should try hard to resist. By doing so, you will be making it harder to meet your goals. The money you take out will miss out on the gains it would have otherwise benefited from. Moreover, it's a lot harder to maintain your current contribution rate if you also have to pay back your loan. There might be some extreme circumstances where borrowing on your portfolio is your only option, but it should be a very last resort. 8. Failing to cut losses: A certain percentage of stocks you choose will show themselves to be losers. Count on this fact. These losers must be dealt with in some way in order ' to limit their impact on your overall performance. Once a stock starts to decline, it can become a vicious cycle leading to even more declines. As unbelievable as it seems, the more and longer a stock declines, the more it is likely to continue declining or going sideways. Even if a stock bounces back, it will mostly take a long time to do so and time is money. For this reason, it is important to stop the bleeding once it becomes apparent that you have chosen a loser. Here, as elsewhere, the actions of most investors are the opposite of logical course of action. Most hold on to their losers hoping against hope that the stock will someday pull itself together. The compelling reason to sell losers is the concept of opportunity cost, i.e. the money you could have made by redeploying your capital to more promising investment. Often, the opportunity cost of holding a losing stock is far greater than the loss on the stock itself. This action means that the stock's price reflects ambitious expectations, which are sometimes hard to meet. Under these circumstances, it is more likely that a stock with positive earnings will sell off because the behavioural value of the stock is bloated. Source: Graphic Business