6 Rules for Successful Stock Market Investing
The stock market can be a scary thing. For novices, the unpredictable -- and at times volatile -- algorithm can seem as much of a gamble as betting on horses. And while it’s true no one can ever truly predict the financial trends of the world and business, there are some tips that can improve your stock experience:
Time is your friend
- Over long periods of time, the stock market has always gone up. If you hold investments for a minimum of 10 years, your percentage of success is on average is around 90%.
Good companies that earn profits are good investments
- Don’t overthink the market. Some of the best investments are the most obvious ones: brand name corporations that continually grow and earn higher profits.
Don’t listen to stock tips
- Beware of “pump and dump” scams in which people try to get people to buy a lot of stock to raise the price. Often times, they are trying to get you to buy their own stock so that they can sell it.
Be okay with cutting your losses
- A general rule of thumb is if a stock goes down 15% from the point you purchased it, it’s time to dump it and move on.
Don’t put all your eggs in one basket
- Diversify your investments among several great companies and you are bound to profit from some of them. Don’t invest everything into a single company, regardless of how great it looks. If something should suddenly happen that depreciates its stock, then you will take a big hit.
Get professional help
- It’s hard not to get emotional when seeing your money go up and down with the market. Sometimes these emotions can cloud our judgment one way or another, and not always for the good. If you are new to investing and find yourself reacting too strongly to how it fluctuates, consider enlisting some professional help to give you some experienced perspective and guidance.
If you apply these rules to your investments, you are much more likely to find success within the stock market.