Investing is About Discipline: Avoid the next HOT tip.

Two of the biggest demons you have to deal with when investing are fear and greed. Both are valid human emotions, but both can get in the way of logical, disciplined investing. If you can manage both your greed and your fear, you can stay away from the lemming-over-the-cliff mentality that grips so many other investors. This applies to any short term comparison between different markets, assets or managed (mutual) funds.

Temptation can be a scary thing and the temptation to run to the smoking hot and fashionable investment of the week is extremely high, so high in fact that many investors take to it like a month to a flame. If you don’t want to get burned, avoid ‘hot’ investment tips from your friends and use discipline as your number one investment strategy.

Why Diversify?

“Don’t put all of your eggs in one basket!” You’ve no doubt heard this said many times throughout your life…and when it comes to investing, it is even more important. Diversification is the key to successful investing.

The key is to invest in several different areas and not just one. That means different industries within equities, different companies for your fixed interest and bonds, as well as a mix of properties. It also means including international investments.

Having all your money in one investment alone is dangerous. If that lone investment takes a significant plunge or worse still is in receivership, you will most likely find that you have lost most or all of your money. On the other hand, if you have invested in ten different shares, and nine are doing well while one plunges, you are still in reasonably good shape.

By diversifying your investments, you will find that you have a lower risk of losing your money, and over time, you should see better returns.

Pay yourself first

It's nearly always possible to save a little money no matter how small the income is and no matter high your expenses seem. Even if you're only able to tuck away enough for one coffee a week, I think it's wise to get into the habit of saving early on. Taken out of your income before you have the chance to spend it and you'll soon get used to not having it. And when the bigger dough starts rolling in, you'll already have some sort of system set up to put money away.