2. Know your risk tolerance

Calculation of risk tolerance is something which people tend to ignore while planning, but this fault can lead you to a major loss. So always calculate your risk but don’t overestimate it. Don’t think a loss of 5 percent is a minor one. In financial world, this 5 percent will rise to 50 percent with time. So while investing, don’t put too much what you can’t effort which will mean you are investing more than your tolerance.

Now you might question how can you do that? Well this has to be done via doing a good homework. Make a good research of what you have? Allocate it properly. Keep some of the chunk for your family, for other purpose like emergency etc. and do a good research where you are going to invest. What is the progress of the company’s stocks etc.