Professional investing is more of a science than an art, because you just cannot make decisions on hazy ideas and concepts. You need the systematic and concrete base of math to make your investment decisions with. The truly gifted investors however, do rely on gut instinct to a large extent.

Investors deal with risk and reward ratio. You may have heard of this before, but do you truly understand what it means to assess an opportunity using this premise? To invest $100,000 it is a lot of money, and more specifically it is a lot of money to lose! Prudence is the key. There are certain guidelines an investor uses to asses risk.

One of the key indicators is the promised return. Typically, a large return will equal high risk of not only the investment not giving you the promised return, but more often than not, the issue is getting your original investment back in the first place.

As a professional investor, the goal is always the end of year over all net return. The higher that percentage is the faster your money compounds and the wealthier you get. Interest upon interest is a skewed little bit of math that most investors adore.

Many people don’t understand how crucial the difference is between a 15% over all return and a 20% over all return. A 30% overall return is magical. The reason why is because interest upon interest pays higher and higher as the compounder increments get bigger. For example, a compounding rate of 10% percent doubled to 20% one would think you made double your money at the end of the financial year, however this is not the case. You made much much more. It is this small fractional skewed effect that makes vast fortunes for investors. Keeping your levels of compounding as high as possible while removing as much risk as possible is the key to being a professional investor.