10 Investing Rules For Beginners
by | Posted 2.15.2013 | Post Comment (1 Comment)

Are you completely clueless about investing your money? Not sure where to start investing and what to do? Well today is your lucky day. We have scoured every single resource online to bring to you the ultimate starter piece for all rookies. If you’re not sure where to start with stocks right now, you’ll be pretty confident by the time you finish reading this. Let’s get started…

What are the 10 investing rules for beginners?

Rule #1: Find an investment account with a strong reputation

You wouldn’t put your money in an unknown savings account nor would you sell your car through a shady dealer. The same goes for stock investing. You want to use a company that has a strong reputation in the investment community so that you don’t get the short end of the stick. You also want to ensure that your money is secure.

Rule #2: Look for low account fees as a rookie

How much are the account fees? When you’re first getting into the stock market, it helps to look around for low account fees so that you don’t spend an arm and a leg on selling/buying shares. You want this process to be affordable and not to prevent you from getting active in the market.

Rule #3: Don’t risk money that you don’t have

The other day a friend was telling me that he wants to get involved in the stock market, but he has no money. His plan is to borrow money. While this could work out for an experienced investor, a rookie simply shouldn’t risk money if they don’t have it.

There’s no need to get too complex here. Just try to stick to the money that you do have. I don’t want to see you lose your mind when you lose money that you don’t have.

Rule #4: Don’t put all of your money into stocks or one stock

It’s not wise to put all of your eggs into one basket as a rookie investor. This is why it’s recommended that you consider dividend investing to see what options are available to you.

Rule #5: Ask for investment advice

Are you clueless about investing? There’s no shame in asking for help. All banks and brokerages offer advice. Take advantage of this advice. It’s there for you. You should be as well-educated as possible.

Rule #6: Understand the business

What’s the business of the company that you’re getting into? Do you understand the business? It’s important to know how the business works and what the industry is like so that you can stay ahead of what’s next. You don’t want to feel clueless when an industry change happens and you don’t know if you should buy or sell shares.

Rule #7: Do your homework on the company

What do you know about this company? It’s critical that you know about the management of the company and what their plans are for the future. You don’t want to be shocked to find out that the company is going in a different direction. Every move affects the future stock price.

Rule #8: Explain your stock picks

Why did you invest into this company? An advanced investor once asked me to explain my stock picks and I couldn’t. The truth was that I listened to advice that I got from a business program. If you can’t personally explain why you’re investing your hard earning money into a specific company, then maybe you need to reconsider your options.

Rule #9: Understand your investor profile

What sort of investor are you? Most brokerages will offer you a test to show you what sort of investor you are. This is important to know so that you don’t get in over your head or take on too much risk at once.

Rule #10: Don’t get too greedy

If you happen to see your stock price soar, please don’t get too greedy. This is easier said than done but this is a common investing mistake. When I first bought stocks in high school I remember laughing over how much the one stock increased. I should have sold. I didn’t. What happened? The price dropped and I lost money.

Those are the ten key principles of investing for all beginners. Once you become more comfortable, you can step outside of your comfort zone and take some big risks with your hard-earned money.