May 21, 2018 / BY AKD

Rule No.1 of Investment All Investors Should Know

How to invest? What are the basic rules that a beginner needs to keep in keep mind before they jump in the investment puddle? Well, out of all the rules, rule number one is the most basic and the most important rule out of all.

What is Rule #1 of Investment All About?

Investment revolves around two simple rules:

  1. Don’t lose money.
  2. Don’t forget the rule number one.

So rule number one is about investing only, and not about speculating. Investing is about certainty. You can’t be uncertain while playing with your money. And guess what? Just about the best investors in the world are unanimously using this strategy. This rule is about focusing on not losing money, that’s the basic idea. This means you have to be certain of what you’re doing, and then go ahead and make the investment. Guessing and hoping and wishing and praying and waiting is what most people are doing and they are not going anywhere with this.

What’s a Decent Business?

What’s a decent/wonderful business? Firstly, it should be an understandable business. Secondly, it has a durable competitive advantage, and third is that the CEO is honest and passionate about what they’re doing.

What is an Attractive Price?

First, you need to know the actual value of the business as a business. You can’t figure out the price until you get to know it's worth. Once you know the worth, you buy it at a discount to its value.

The Four Ms

Meaning, Moat, Management, and Margin of safety are the four Ms that you go to play with.

What kind of business is a good business? It’s understandable, we call that the meaning of the business. Its durability is the moat. The honesty, time-orientation, and passion are called the management. Then comes the 4th M; Margin of safety. It is a price that we arrive at by looking at the sticker price, which is the value and then we look 50% below that to buy it.

AKD group is very prominent in the investing circle. Following the rule number one will help you understand further strategies used by successful businessmen like Aqeel Karim Dhedhi and many others.

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