Savvy investors think twice about the long-term value of a firm before jumping in with both feet. Investing indeed has a great potential for financial gain, but at the same time, it is very easy to lose a lot of money. We can find successful stories of investors like Warren Buffett, who made enormous profits. But we often don’t know about people who lost everything. Therefore, we must question ourselves whether investing is actually worth the risk. To do so, we need to learn what wise investment is.

Wise investors conduct in-depth studies in order to ensure their investments are safe and bring regular profits. Speculating, for example, is a different approach in which investors concentrate on the short-term gains made available by market swings. It is extremely risky since no one can foresee the future.

For instance, a speculator may want to buy many Apple stocks after hearing a rumor about a new hit product release coming soon. But in reality, such an investment will remain uncertain. If they are fortunate, their investment will pay off. Otherwise, they can lose everything if the rumor turns out to be false.

Wise investing entails considering various aspects, including pricing. Clever investors only purchase stock when it trades below its inherent value or the likelihood of future growth is high. In other words, you expect the difference between the price you pay and the profits you'll make to be positive.

Look at a new investment as you would look at your shopping. For instance, a pricey outfit is only worthwhile if you intend to wear it. If the quality is not that worthy, spending less on one that will last just as long would be better. An intelligent investor's life may seem tedious, but the aim is profit, not a roller-coaster life. As you might guess, a wise investor needs a pretty high IQ level. One example of such a person is Sir Isaac Newton, who owned shares in the South Sea Company in 1720.