What Are the Golden Rules of Investment Banking

A career in the Investment Banking industry often seems very lucrative for an outsider given the huge perks and benefits that the role entails. The reality of the job is quite different from what it seems. The remuneration is certainly very lucrative, there is no denying that but the work it takes to make it, in the long run, is undesirable by a normal person. To thrive as an investment banker one needs to work on their soft skills as much as they work on their financial knowledge and other technical skills.

The Investment Banking industry is very dynamic and volatile. No matter what you do you can’t predict the outcomes with perfect accuracy, there is always some uncertainty and risk involved in this game. To succeed and grow your career in the Investment Banking industry you need to be a hard worker who is persistent and patient. Knowing about the industry is not enough; you need to know everything about your clients and competition.

At managerial levels, the job involves a lot of socialising and networking with high-profile individuals and organizations that require you to be an effective communicator. One of the most important skills that you need to have or develop is being a great salesperson because at some point or another in your career you will need to bring more clients and revenue for the company. Let’s talk about some of the golden rules of investing that every investor should be aware of, these are more like thumb rules of investment.

Goal Setting

One of the most important factors that are common to all vocation but more like a rule in the investment banking sector. Being an investment banker you need to handle the money of your client. When you invest the money you need to know about the financial goals and the time frame that you’ll be an investment for. This provides clarity and helps you stick to your strategy.

High Risk, High Returns Trade-Off

High returns often seem very lucrative but the other side of the story is not very appealing. There is often a high degree of risk associated with high returns. You should choose your investments based on your client’s risk appetite and return estimates.

Investment Diversification

Diversification is one of the most rudimentary steps in mitigating the risk associated with investing. Spreading your investment amount across a range of assets and geographical areas is often a smart move and helps to protect your overall investment amount. It is as simple as not putting all the eggs in one basket.

Invest With A Long Term Vision

When you are investing the money it should not be from a short-run perspective, the return is often very volatile in the short run and hard to predict what you’ll get back. Long run investments are often very stable and provide a balanced return on investment. The process of investing is not a get ultra-rich instantly scheme.

Portfolio Review

One of the most important rules of investment is to review the portfolio that you have created. Your investment will change in value over time and might differ from your investment objectives in the beginning, this needs to be handled proactively by making necessary iterations in your investment portfolio to get the desirable outcomes.

Refrain From Timing The Market

When markets are efficient and you have perfect knowledge you could buy the securities when they are undervalued and sell them when they become overvalued. Unfortunately, it’s very hard and risky to time your investments given the fluctuations in the stock market. Buying and holding your securities in the medium run is a good option to stay afloat in the game.

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