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10 Stock Investing Tips

March 21st, 2008 by Wealth Builder

With the real estate market down and the economy falling into recession, there is a lot of attention on the stock market. Many people are looking at the stock market and hoping to make short term and long term gains. There is no doubt opportunities to make money in the stock market and we should consider these options as well for our investment portfolio. Here are 10 stock investing tips to keep in mind. 

1. Long-term investment
Typically stock prices will go up and down and fluctuate even more in the short term. Don’t pay attention to the daily fluctuations in your stock. Always invest with the long term in mind.

2. Diversify!
Diversiy your investments with low, medium and high risk stocks. Pick some fixed income securities especially in fluctuating markets. As they say “don’t put all your eggs in one basket” applies here.

3. Online trading is quick and easy, online investing takes time
These days the internet has made trading so easy. With one click, you can buy and sell stocks from more than 100 online brokers with low commissions. However, this does not take the homework out of researching and making investment decisions.

4. Don’t gamble!
If you can’t afford to lose the money, then don’t gamble it on a stock purchase. Choose more conservative investments with low risk if you are worried about your money.

5. Don’t expect miracles!
If you come across some recommendations from a friend or broker that a stock is going to double in value in a few months - beware! Don’t go into the investment expecting this. If you are lucky and the stock does go up 50% or more, then consider selling and get your returns immediately.

6. Investigate for yourself!
One of the most important principles I stand by is “Independent Investigation of Truth”. To me this means get as much information as possible and analyze before making your investment decisions. Its ok to get information from multiple sources and then compare to what your investigation tells you. This can alert you to any inconsistencies and inaccuracies in the investment you are considering.

7. Buy and hold doesn’t always work
If you are sitting comfortable on a rising stock, don’t get greedy. Set your limits and investment goals and sell the stock when you reach your returns.

8. Set investments goals & sell limits
Determine the price at which you’re willing to sell. Based on this and the interest rate, you can determine the return you want.

9. When it’s time to act, don’t hesitate
After you complete your research and you are feeling the urge to buy or sell a stock, don’t hesitate. Time lost can translate to money lost. Your impression is probably correct so act on your urge!

10. Seek a Professional Financial Advisor or Consultant
If you are a novice to stock investing, seek professional help or a stock brokerage to assist you with research and opening a stock purchase account. Once you are comfortable with the markets and know where to get online resources, you can do the research on your own and are ready to switch to an online broker.

If you have others that you recommend or would like to tell me about your experiences and what you think of stock market investing, please post your comments below. Look forward to learning from each other.

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This entry was posted on Friday, March 21st, 2008 at 6:35 pm and is filed under Financial Markets, Investing, Stocks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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