Three Investment Rules I Learned from Texas Hold’em

While learning to play Texas Hold’em over the last year I picked up several basic concepts that have held true and helped me improve my game. Three of these concepts can be applied to helping improve your investment returns as well.

1) Know When to Fold’em
Sometimes in poker you start out with a promising hand but after you see the first few cards it doesn’t look so good after all. When you’re dealt a suited Ace, King in poker your heart leaps. When the next cards are 5, 7, 9 your high hopes are dashed. At this point you may have already invested money into the hand through a blind or a raise and it’s hard to let go but many times it is the best move.

Have you ever bought stock in a company with great potential but over time the profits never materialized or the company lost its way? It’s hard to let the stock go but if the fundamentals aren’t there then it’s time to sell.

Know when to sell a good investment gone bad.

2) Know Your Odds
Experienced poker players know the odds of winning each hand they play. They know the probability of winning and weigh the risks against the potential rewards. It takes time and practice to learn the odds but knowing them gives you the edge you need to win.

When you’re investing in a company, knowing the fundamentals is of utmost importance. If you don’t know the fundamentals, don’t invest. Why trust your money to an investment without knowing there is a reasonable probability you’ll make money?

Know your risk/reward ratio before buying a stock.

3) Be Patient
One of the comon temptations in poker is to bet on marginal hands when you’re just not getting good cards. You want to be playing the game, not watching it! However, I’ve learned that you’re better off in the long run ignoring the the bad opportunites and waiting for the good ones.

Poker games are won one hand at a time, just like investment portfolios grow over time with smart, steady investments. Don’t bet all your money on the first three hands. In other words, don’t approach investing with the attitude that you’ll get rich quick. Steady investing over time leads to wealth.

Investing regularly and in good opportunites wins the race. Don’t try and get rich quick.

Invest to Win
Obviously there is a difference between gambling and investing but using these three concepts will help reduce your investing stress and increase the return of your portfolio.

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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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