I was talking about investments with a friend of mine yesterday. Freedom 55 has been an objective for me for many years. And, as I thought about the key lessons that I have learned, the basic principles for successful investing are pretty simple.
1. I invest in companies whose products and services I understand.
2. I invest in companies that pay a rising dividend.
3. I buy the stock of great companies when the stock goes on sale.
4. I only invest in companies that can weather economic volatility.
5. I hold the stock. If it is a great company, paying good dividends, then I never sell the stock.
6. I assess the company before I buy its stock. The company should be dominant in its market, with a long history of strong performance and a strong brand loyalty.
I haven’t always been true to these principles. However, as my children get a bit older, I will ensure that they etch these principles into their financial planning. An early start means an early finish, or at least the option to choose.