Monday, October 31, 2016

Never spend your capital for investment

Many people make the mistake of spending their investment capital when they have made money.

For example, when they sell a rental apartment, they tend to spend the money instead of preserving the capital for future investments.

Let us assume that you have made a profit of $100,000 on top of your investment capital of $50,000. 

Most people can never resist the temptation to spend all the money.

They should spend half of the profits, and use the other half with the original capital for other investment opportunities.

Once you have eaten up all the money, you are back to square one.  That means you have to save very hard, and build up your investment portfolio again.

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