Step 6 – Don’t invest your money in something you don't know.

          Just stay away from invest in what you don't know. For example, if you want to invest in a stock like Microsoft corp., you need to know the Microsoft business quite well. Also, derivative products may be too complicated for general individual investors.

 

        Sub prime crisis is another example of insufficient knowledge investment. They invest in assets they did not really understand. Despite high returns, investors got their money burnt.