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What You Need to Know About a Company Before Putting Your Money Behind It Make sure you trust and understand a business first.

By Phil Town

Opinions expressed by Entrepreneur contributors are their own.

When putting together your portfolio, it's important to choose your investments wisely. One bad decision can cripple your overall investment trajectory, and of course, at the end of the day, you don't want to lose money.

In this video, Entrepreneur Network partner Phil Town offers some guidelines to make sure the companies you choose won't backfire on you later. Go for stocks that you believe in and understand. If you are not completely sure what the company does, it may not be right for you. Also, you want to pay attention to whether the company you're investing in is trustworthy. Does the CEO's pay reflect the value of the company? Are the executives speaking honestly or are they sugarcoating the reality of the company's details? These, among other tips, can help you make the best investment decisions.

Click play to hear more from Town on smart investing.

Related: Avoid Digging Yourself Into an Investment Hole With These Tips

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Phil Town is an Investment Advisor, Hedge Fund Manager, 2x New York Times Best-Selling Author of Rule #1 & Payback Time, and Ex-Grand Canyon River Rafting Guide. Rule #1 Investing is Warren Buffett style investing, teaching you how to buy businesses on sale, with little risk and 15 percent returns. In fact, Rule #1 investing is practically immune to the ups and downs of the stock market.

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