Rule 4: Think before ReInvesting

This is the fourth part of multi-part series - "Rules in online investments".  Whether it is stock market or Forex or HYIP, there are always rules and strategies to be followed.  If you follow my set of rules, then definitely you can minimize your risk and maximize your profit.  If you are new to my blog then you can read the first 3 rules by following the below links,

Rule 1 - Invest what you can afford to loose

Rule 2 - Don't invest without doing due-diligence

Rule 3 - Diversify your investments

Let's assume that you invested 100$ in a program and got 150$ back after 1 month.  That's a 50$ profit, which is good.  Now, don't just re-invest all your 150$ back into that same program.  Don't just let your emotions take over.  Don't be greedy.  Here, all you have to do is - "Start from Rule 1".  Yes, you have to start all the way from Rule 1 for each and every re investments also.

 Now, Rule 1 - Are you ready to afford to loose 150$?  No, Not at all.  You did a good job last time and got 50$ profit.  Now, you will loose both your principle and profit if this program collapses.  So, how to take a decision at this situation?  I suggest you to consider a range and go to Rule 2.  If I am in this same situation then I will consider to invest between 0$ and 100$.  

Next, Rule 2 - This is the most important rule.  Perform your due-diligence.  Don't be careless here.  Read my Rule 2 article and follow each and every step mentioned there.  Rate the program with a scale of 1 to 5.  Don't reinvest if your average rating is less than 3.5.  You have high risk to loose your money.  If you get somewhere between 3.5 and 4.0, then you can consider to invest 25$.  If you get a rating between 4.0 and 4.25 then you can invest all your profit which is 50$.  Between 4.25 and 4.5, you can invest 75$ and above 4.5 you can invest 100$.  This is called Calculative risk.  You have to do all this math to minimize your risk.

As per Rule 3, you can diversify the rest of the money.  

Decision to either reinvest or not is always tough.  My advice is don't wait till the end of first cycle.  If you think that the program is doing well, then consider investing little more before the end of first cycle itself.  That will help you to minimize your risk even more when compared to reinvesting after first cycle.  I wish you all the best in your High Risk online investments.