22 Laws of Investing And How You Can Apply Them To Live A Better Life

Fahri Karakas
8 min readFeb 29, 2024
Photo by Chris Liverani on Unsplash

Recently, I have developed a fresh and exciting interest in investing.

Recognizing the potential to build wealth, secure my financial future, and achieve my long-term goals, I have eagerly delved into the world of investments.

As I embark on this journey, I have come across various principles and laws that govern the art of investing.

These laws provide valuable insights and guidelines that not only apply to the realm of finance but can also be applied to living a better life overall.

With a multidisciplinary perspective, and the use of mental models, I aim to explore and explain these laws, and how they can be practically applied to enhance our daily lives.

In this article, I present 22 principles of investing and demonstrate how they can be effectively applied to our everyday lives.

22 Principles of Investing And How You Can Apply Them To Live A Better Life

Photo by Stephen Dawson on Unsplash

1. Law of Diversification:

This law states that spreading your investments across a range of assets can help reduce risk and increase returns. It encourages investors to not put all their eggs in one basket and diversify their portfolio by including different asset classes such as stocks, bonds, real estate, and commodities.

2. Law of Compounding:

This law emphasizes the power of compounding returns over time. By reinvesting earned profits, you can earn additional returns on your initial investment, resultantly accelerating your wealth creation. This law teaches the importance of patience and long-term investing.

3. Law of Risk and Return:

This law suggests that higher risks are typically associated with higher potential returns. Investors need to understand their risk tolerance and consider the level of risk they are willing to accept in order to achieve their desired returns. Balancing risk and return is…

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Fahri Karakas

Associate Professor in Business & Leadership at University of East Anglia. Passionate about doodling, imagination, and creativity. Author of Self-Making Studio.