What Is Focused Investing? Focus Investor’s 5 Golden Rules

Investing have different strategies for itself, everyone chose their own way of investing, some prefer value investing and some prefer growth investing. Some want to diversify among sectors some want to stay focused.

We will discuss on focused investing here,

What Is Focused Investing?

Focused Investing is a strategy in which the investor or portfolio manager only invests in a limited set of quality companies that after thorough analyses assure handsome returns over the period of time.

There are many value investors who prefer this strategy for their portfolio as they prefer being more concentrated towards the companies they own.

If you are the one who is fond of a focused investment strategy and feels it is suitable for you plus you are not much active in investment management by yourself then for you there is a category of Focused Funds in Mutual Funds, You can select the best one from them for your investments.

Focus Investor’s 5 Golden Rules

1. Concentrate your investments in outstanding companies run by strong management.
2. Limit yourself to the number of companies you can truly understand. 10 is a good number, more than 20 is asking for trouble.
3. Pick the very best of your good companies, and put the bulk of your investment there.
4. Think long term – 5 to 10 years, minimum.
5. Volatility happens. Carry on.

Source: Warren Buffett Portfolio: Mastering the Power of the Focus Investment Strategy

If you are into direct equity investing all by yourself and you look for quality companies for 5 to 10 years, then it is highly recommended you follow these 5 golden rules.

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