5 Investment Tips Shared by the World's Largest Hedge Fund Chairman

Ray Dalio, is a figure who is no stranger to the world of investment, especially in the Wall Street market.

He is the founder of Bridgewater Associates, the world's largest hedge fund. What is impressive is that the company is based in one bedroom of his apartment.

In addition, he is known as the head of the hedge fund which gives the most returns to customers which is $ 50 billion dollars, the largest amount recorded in the history of the world hedge fund.

As such, Ray Dalio chose to share some of the principles he practiced through a published book entitled ‘Principles: Life and Work.”

So, what are some useful tips emphasized by this great figure?

1. Diversity of investment

Ray Dalio adopts a diversification strategy or better known as ‘diversify’ based on the principles of reality.

This principle teaches us to see the reality of the world instead of the fantasy.

The reality in investing is that we do not focus on a single investment because the loss or profit of investment is beyond our expectations.

He argues that 15 investments are needed to reduce the risk factor by 80%.

2. Understand the risk of inflation

Inflation is a big issue affecting financial markets. So, investors need to be wise in dealing with the risk of inflation in order to be able to obtain consistent returns from time to time.

Do not predict deflation and inflation instead, it is necessary to examine every data that affects the current economic situation in order to plan wise investments.


3. Do not be biased

Bias or bias is the number one killer in investing! Most investors have a tendency to market or bias either bullish or bearish.

Bias will cause investors to act recklessly and open trading positions (buy or sell) for too long so that it is difficult to control.

An effective measure to avoid bias is diversity. (Refer to the first tips)

4. Sell the winners, buy the losers

Ray Dalio emphasizes making a profit at the full price of the stock by selling and reinvesting the profit.

This technique is called ‘rotating the portfolio.’

5. Learn about interest rates

According to Ray Dalio, it all revolves around interest rates. As an investor, we place payments for future financial flows.

So, it is very important to understand the interest rate as well as study the factors that affect it.

Do not try to predict interest rates but understand the structure and why it is moving.

In conclusion, these five tips are important and given for free for you. So, what are you waiting for? Let's all practice to be smart investors!