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Essential Guidelines Before You Start

The world of investing is complex and multi-faceted, with a myriad of different choices and decisions you can make and a wealth of investment opportunities which will crop up. As an inexperienced novice investor, it can often seem perplexing, especially when trying to take that nerve-racking initial cold plunge. The problem is that it’s easy to get tripped up by bad advice and lies, silly speculation, lack of information, your own emotions and a whole host of other understandable influences.

While there are various factors to consider when you’re just learning how to start investing in stocks, bonds, currencies and alternatives, before you even think about the where, what, how and how much, there are some essential and basic guidelines that you need to take into account and adhere to. If you take the following tips and warnings to heart and actually apply them before and during your investment journey, your decisions will be more informed and you’ll minimize the risk and maximize your chances of achieving your investment goals. It doesn’t have to be a stressful or arduous process if you take the time to prepare properly. It’s easy to read and understand the do’s and don’t’s, but you must also stick to them, not just pay them lip service.

So, here we go with our comprehensive list of vital tips, warnings and suggestions for you to consider when taking that exciting first step and trying to work out how to invest in stocks and bonds and all the other choices you have.

PUT YOUR FINANCIAL HOUSE IN ORDER FIRST

PUT YOUR FINANCIAL HOUSE IN ORDER FIRST


Before you start thinking about how to start investing in stocks or bonds or whatever investment opportunities you find, you must first make sure that your personal finances are in order. You need to know exactly how much you have for investing, without risking having to mortgage your house and selling the kids in order to pay for it all. You must ensure that you’re not being bled dry by high-interest debt, credit card payments, overdraft fees and any overdue bills, as well as being acutely…

SET CLEAR OBJECTIVES AND HAVE A CLEAR VISION OF WHAT YOU WANT TO ACHIEVE

SET CLEAR OBJECTIVES AND HAVE A CLEAR VISION OF WHAT YOU WANT TO ACHIEVE


Investing is a wide and complicated spectrum and there are many different avenues you can take, investment opportunities you can seize, or objectives you can aim for. You must first think honestly about what it is you want to achieve in terms of what it is you are intending to do with your profits; is it for your retirement, for your kids, imminent hospital bills, that holiday home you’ve always lusted after, a new boat, travel? Do you want to go for high risk high returns, low risk but with…

DECIDE HOW MUCH TIME YOU HAVE OR WANT TO DEVOTE TO INVESTING

DECIDE HOW MUCH TIME YOU HAVE OR WANT TO DEVOTE TO INVESTING


Whether you’re a novice investor thinking about how to start investing in stocks, bonds, currencies or alternatives, or a professional seeking out new investment opportunities, you must decide how much time you have to devote to the whole process of investing. For example, when working out how to invest in stocks, you must calculate the whole procedure from start to finish, from the time you put into research to the time you spend finding a broker, communicating with your broker, following…

RESEARCH, RESEARCH, RESEARCH

RESEARCH, RESEARCH, RESEARCH


Failing to prepare is preparing to fail. It’s a cliché because it’s true. The world of investment is enormous and the permutations are limitless, and there is so much information to digest and understand, and then use to make an informed decision about your where, what and how. There is a wealth of information out there about how to invest in stocks, bonds, currencies and all the other different investment opportunities which will come your way, both in the web ether, television,…

ALWAYS QUESTION AND SCRUTINIZE ALL ADVICE AND INFORMATION

ALWAYS QUESTION AND SCRUTINIZE ALL ADVICE AND INFORMATION


This is just common sense and should apply to your life in general. There is no definitive expert on anything in life, although many claim they are, especially when you inquire about how to start investing in stocks and shares, and you must always question any advice you are given or news that you read. You must ask the right questions and carefully consider the answers, but you must also take into account that sometimes people lie or offer biased opinion, or are, quite simply, wrong. The more…

DO NOT BE A SHEEP

DO NOT BE A SHEEP


Much as in the previous point, you must analyze everything and make an informed decision when thinking about any investment opportunities. You should never make decisions based on what other people do because they may all be wrong, and in fact they may all be following the actions or advice of merely one person or brokerage firm who may be wrong. Think for yourself, do your own research, and make your own decisions. Do not follow others, and just as importantly, do not be ‘herded’ or…

DO NOT IDOLIZE ANY OTHER INVESTORS

DO NOT IDOLIZE ANY OTHER INVESTORS


There are no demi-gods out there, they’re all mere men, and they can all be wrong or make mistakes. especially when it comes to working out how to invest in stocks and shares. Even Warren Buffett and Peter Lynch have made errors in judgment from time to time, and every investor has lost money or failed to seize great investment opportunities at some point or another. Also, everybody has different goals and strategies, and you should never try to copy another investor’s tactics or policies…

DECIDE IF YOU’RE A RISK TAKER, RISK AVERSE, OR IN THE MIDDLE

DECIDE IF YOU’RE A RISK TAKER, RISK AVERSE, OR IN THE MIDDLE


Again, when working out how to start investing in stocks, bonds, currencies and alternatives, take your time to decide what kind of investor you are and what kind of strategy you want to adopt; everything flows on from that. Remember, there is nothing wrong with whatever you decide but you must be clear in your mind what kind of person you are, and, more importantly, what kind of investor you are, not who you wish to be. Are you a risk taker willing to throw lots of money at high risk…

DO NOT INVEST ON EMOTION

DO NOT INVEST ON EMOTION


Investing should be based on information and strategy, as well as sound advice, and it should never be influenced by emotions. Positive emotions can be blinding to the facts, just as much as panic-stricken decisions can bring about huge losses. Don’t fall in love with your investments. Make your decisions about any investment opportunities without any emotional attachment.

PAY ATTENTION TO THE AGENT’S FEES

PAY ATTENTION TO THE AGENT’S FEES


This is a vital part of working out how to invest in stocks. You must remember when choosing a broker or a fund that you will have to pay trade commissions, expense ratios, advisor fees, either as a percentage or a straight fee. These fees will obviously cut into your profits, and, usually, you will have to pay them regardless of whether you make a profit or a loss. Take the time to work this out so you can actually work out your ‘net’ profit from any investment opportunities.

DO NOT BE OVER-CONFIDENT

DO NOT BE OVER-CONFIDENT


Even if you have some success, it doesn’t mean that every investment you make will be successful. You must treat each new foray the same as before and do your research, spend time getting as much information as possible, and ask as many questions as you can about any investment opportunity. Every new investment has the same likelihood of success or failure and you should never become too confident since this is the first step to losing your money.

VALUE THE ART OF PATIENCE

VALUE THE ART OF PATIENCE


Holding on to stocks which are showing a drop or undergoing a dip can be invaluable since markets will always fluctuate, and a downward shift may well at some point take an upturn, depending on various different factors. Many people will panic and cut their losses at the first sign of a dip, but you must take your time and evaluate the situation with a clear and reasoned approach. You can even find a way to use a loss as a gain-loss transaction which may save you taxes, another example reminder…

DO NOT ATTEMPT TO OUTSMART THE MARKET

DO NOT ATTEMPT TO OUTSMART THE MARKET


Quite simply you can’t. This should be the first thing to consider when trying to work out how to invest in stocks. The market is too varied and it fluctuates too much, and there are too many factors which may influence which way it will go. Warren Buffett said that “the aim of a non-professional investor should not be to pick winners – neither he nor his ‘helpers’ can do that – but should rather be to own a cross section of businesses that in aggregate are bound to do well.” And…

DO NOT OVER-MONITOR YOUR INVESTMENTS

DO NOT OVER-MONITOR YOUR INVESTMENTS


Basically, sometimes, less is more. The more you scrutinize your investment, the more likely you are to get muddled and confused about what is happening. You may see a slight movement one day and panic, whereas the reality is that it was temporary and little more than a blip. A market correction can quite often lead to bad decision-making. It’s human nature that the more you spend time looking at a certain investment, the more likely you are to feel that you should do something, anything,…

DEAL WITH LOSSES FROM A CLEAR, REASONED AND RATIONAL PERSPECTIVE

DEAL WITH LOSSES FROM A CLEAR, REASONED AND RATIONAL PERSPECTIVE


Losses are part of the landscape when it comes to investing, and even really sweet investment opportunities can turn sour. You can learn from them, you can use them to save on your taxes, and the more you view them with a rational mind, the more likely it is that one particular loss will not have any knock-on effects on other investments. When working out how to invest in stocks, learn from losses, they’re not the end of the world.

NEITHER COURT NOR FEAR RISK

NEITHER COURT NOR FEAR RISK


Investment opportunities are never a sure thing. Risk is, like losses, part and parcel of the world of investment. It will be part of your life in investments whether you look for it or not. It’s neither exciting nor something that should be feared, and you should neither look for it nor be scared to embrace it. The only important thing is to make sure the risk is calculated and made from an informed position. There is an appropriate level of risk for whatever level of investor you are.

DIVERSIFY YOUR INVESTMENTS

DIVERSIFY YOUR INVESTMENTS


The concept is obvious enough; if you invest in several different assets, you are reducing the risk of losing all your money since a loss in one venture can be covered by a profit in another. However, this is something which often confuses new investors when first learning about how to invest in stocks and all the other different assets. Diversification does not necessarily mean making lots of different investments, but it should also include different ‘types’ of investment, different types…

DO NOT BE AFRAID TO ALTER YOUR STRATEGIES AS TIME GOES ON

DO NOT BE AFRAID TO ALTER YOUR STRATEGIES AS TIME GOES ON


Life is not static and your goals or long-term viewpoints may well change over time. This may mean that it might make sense to change your investment strategy too. This doesn’t mean that you were wrong the first time, it merely means that what was right for you before no longer makes sense to you now. You may have been pursuing high risk high yield investment opportunities before due to a need for quick cash, but, after achieving those goals, you may now want to put those profits into slow…

MAKE SURE THE SELLERS ARE LICENSED

MAKE SURE THE SELLERS ARE LICENSED


Make sure someone is licensed to sell investments and that they have a valid securities license. Also, unscrupulous brokers and con artists will bypass state registration requirements to sell fraudulent investments. Be aware and do your research with the Secretary of State’s office.

DO SOME RESEARCH ABOUT ONLINE FRAUD

DO SOME RESEARCH ABOUT ONLINE FRAUD


This is something which is real and it can happen to you. Online boiler rooms are being used to lure investors into classic “pump-and-dump” stock schemes, and they’re getting more and more sophisticated. Make sure you do your research and investigate as much as possible before investing with online brokers. Don’t let greed play into their hands. Investment opportunities which seem too good to be true generally are frauds.

PUT YOUR FINANCIAL HOUSE IN ORDER FIRST

Before you start thinking about how to start investing in stocks or bonds or whatever investment opportunities you find, you must first make sure that your personal finances are in order. You need to know exactly how much you have for investing, without risking having to mortgage your house and selling the kids in order to pay for it all. You must ensure that you’re not being bled dry by high-interest debt, credit card payments, overdraft fees and any overdue bills, as well as being acutely aware of any impending payments you may have to make in the future.

SET CLEAR OBJECTIVES AND HAVE A CLEAR VISION OF WHAT YOU WANT TO ACHIEVE

Investing is a wide and complicated spectrum and there are many different avenues you can take, investment opportunities you can seize, or objectives you can aim for. You must first think honestly about what it is you want to achieve in terms of what it is you are intending to do with your profits; is it for your retirement, for your kids, imminent hospital bills, that holiday home you’ve always lusted after, a new boat, travel? Do you want to go for high risk high returns, low risk but with a lower yield, do you want to stake all your savings or just a small portion? What do you want to ultimately gain from any potential returns from your investments? How will you go about learning about how to invest in stocks? Ask yourself these questions and make sure you answer honestly. The honesty part is vital. Then you can move on.

DECIDE HOW MUCH TIME YOU HAVE OR WANT TO DEVOTE TO INVESTING

Whether you’re a novice investor thinking about how to start investing in stocks, bonds, currencies or alternatives, or a professional seeking out new investment opportunities, you must decide how much time you have to devote to the whole process of investing. For example, when working out how to invest in stocks, you must calculate the whole procedure from start to finish, from the time you put into research to the time you spend finding a broker, communicating with your broker, following the market, calculating amounts invested and yields expected, actually transferring money from your account to investment accounts and so forth. It’s never just a case of looking at a chart and making a simple phone call, and you must factor in all the variables, else risk bringing undue stress into your life.

RESEARCH, RESEARCH, RESEARCH

Failing to prepare is preparing to fail. It’s a cliché because it’s true. The world of investment is enormous and the permutations are limitless, and there is so much information to digest and understand, and then use to make an informed decision about your where, what and how. There is a wealth of information out there about how to invest in stocks, bonds, currencies and all the other different investment opportunities which will come your way, both in the web ether, television, newspapers, seminars and books, all of which can help you get a more comprehensive understanding of the world you are about to enter into. Similarly, you must also put in the same work in researching your broker, their background, their track record. Then don’t rest on your laurels but ensure that you maintain that same mentality after you start investing; always do a ton of research into every stock or commodity you want to invest in. And a pretty good place to start? Check out our News section daily and you will be kept abreast of all the current events and movements in the market.

ALWAYS QUESTION AND SCRUTINIZE ALL ADVICE AND INFORMATION

This is just common sense and should apply to your life in general. There is no definitive expert on anything in life, although many claim they are, especially when you inquire about how to start investing in stocks and shares, and you must always question any advice you are given or news that you read. You must ask the right questions and carefully consider the answers, but you must also take into account that sometimes people lie or offer biased opinion, or are, quite simply, wrong. The more information you have the better, but even more important is that you scrutinize every answer and every scrap of information when considering any investment opportunities. This is what we firmly believe in and it’s why we provide a crowd-sourced content service where we compile information and reports from a long list of different sources in order to give you the most comprehensive and unbiased advice and guidance, as well as providing you with the opinion of several experts in different fields, especially in how to start investing in stocks and shares. Do not be overawed by authority.

DO NOT BE A SHEEP

Much as in the previous point, you must analyze everything and make an informed decision when thinking about any investment opportunities. You should never make decisions based on what other people do because they may all be wrong, and in fact they may all be following the actions or advice of merely one person or brokerage firm who may be wrong. Think for yourself, do your own research, and make your own decisions. Do not follow others, and just as importantly, do not be ‘herded’ or ‘shepherded’ into the various “must buy stocks” which invariably crop up from time to time. When first learning about how to invest in stocks and shares, you must find out the true value of a stock before you invest, and work out for yourself if it truly is a bargain.

DO NOT IDOLIZE ANY OTHER INVESTORS

There are no demi-gods out there, they’re all mere men, and they can all be wrong or make mistakes. especially when it comes to working out how to invest in stocks and shares. Even Warren Buffett and Peter Lynch have made errors in judgment from time to time, and every investor has lost money or failed to seize great investment opportunities at some point or another. Also, everybody has different goals and strategies, and you should never try to copy another investor’s tactics or policies unless you fully understand them. But more importantly, nobody knows everything, there is no holy Guru with an enlightened understanding of the world of investment; question everything and everyone, no matter who it is. Question us! Again, we like to offer a wide range of experts and opinions from different people so that you are better placed to make your investment.

DECIDE IF YOU’RE A RISK TAKER, RISK AVERSE, OR IN THE MIDDLE

Again, when working out how to start investing in stocks, bonds, currencies and alternatives, take your time to decide what kind of investor you are and what kind of strategy you want to adopt; everything flows on from that. Remember, there is nothing wrong with whatever you decide but you must be clear in your mind what kind of person you are, and, more importantly, what kind of investor you are, not who you wish to be. Are you a risk taker willing to throw lots of money at high risk investment opportunities in order to make lots of quick big cash, or are you more into slow but safe options. For example, if you don’t like taking risks, it’s probably better to invest in index funds or throw your lot into a mutual fund rather than go for individual stocks in order to reduce the risk. But what’s most important is to decide, honestly, what kind of investor you are.

DO NOT INVEST ON EMOTION

Investing should be based on information and strategy, as well as sound advice, and it should never be influenced by emotions. Positive emotions can be blinding to the facts, just as much as panic-stricken decisions can bring about huge losses. Don’t fall in love with your investments. Make your decisions about any investment opportunities without any emotional attachment.

PAY ATTENTION TO THE AGENT’S FEES

This is a vital part of working out how to invest in stocks. You must remember when choosing a broker or a fund that you will have to pay trade commissions, expense ratios, advisor fees, either as a percentage or a straight fee. These fees will obviously cut into your profits, and, usually, you will have to pay them regardless of whether you make a profit or a loss. Take the time to work this out so you can actually work out your ‘net’ profit from any investment opportunities.

DO NOT BE OVER-CONFIDENT

Even if you have some success, it doesn’t mean that every investment you make will be successful. You must treat each new foray the same as before and do your research, spend time getting as much information as possible, and ask as many questions as you can about any investment opportunity. Every new investment has the same likelihood of success or failure and you should never become too confident since this is the first step to losing your money.

VALUE THE ART OF PATIENCE

Holding on to stocks which are showing a drop or undergoing a dip can be invaluable since markets will always fluctuate, and a downward shift may well at some point take an upturn, depending on various different factors. Many people will panic and cut their losses at the first sign of a dip, but you must take your time and evaluate the situation with a clear and reasoned approach. You can even find a way to use a loss as a gain-loss transaction which may save you taxes, another example reminder that investment opportunities can be found everywhere.

DO NOT ATTEMPT TO OUTSMART THE MARKET

Quite simply you can’t. This should be the first thing to consider when trying to work out how to invest in stocks. The market is too varied and it fluctuates too much, and there are too many factors which may influence which way it will go. Warren Buffett said that “the aim of a non-professional investor should not be to pick winners – neither he nor his ‘helpers’ can do that – but should rather be to own a cross section of businesses that in aggregate are bound to do well.” And that’s Warren Buffett.

DO NOT OVER-MONITOR YOUR INVESTMENTS

Basically, sometimes, less is more. The more you scrutinize your investment, the more likely you are to get muddled and confused about what is happening. You may see a slight movement one day and panic, whereas the reality is that it was temporary and little more than a blip. A market correction can quite often lead to bad decision-making. It’s human nature that the more you spend time looking at a certain investment, the more likely you are to feel that you should do something, anything, either sell or buy more. While you should always monitor your investments, try to moderate it.

DEAL WITH LOSSES FROM A CLEAR, REASONED AND RATIONAL PERSPECTIVE

Losses are part of the landscape when it comes to investing, and even really sweet investment opportunities can turn sour. You can learn from them, you can use them to save on your taxes, and the more you view them with a rational mind, the more likely it is that one particular loss will not have any knock-on effects on other investments. When working out how to invest in stocks, learn from losses, they’re not the end of the world.

NEITHER COURT NOR FEAR RISK

Investment opportunities are never a sure thing. Risk is, like losses, part and parcel of the world of investment. It will be part of your life in investments whether you look for it or not. It’s neither exciting nor something that should be feared, and you should neither look for it nor be scared to embrace it. The only important thing is to make sure the risk is calculated and made from an informed position. There is an appropriate level of risk for whatever level of investor you are.

DIVERSIFY YOUR INVESTMENTS

The concept is obvious enough; if you invest in several different assets, you are reducing the risk of losing all your money since a loss in one venture can be covered by a profit in another. However, this is something which often confuses new investors when first learning about how to invest in stocks and all the other different assets. Diversification does not necessarily mean making lots of different investments, but it should also include different ‘types’ of investment, different types of assets, and different industries or markets. Investment opportunities are not tied to one particular asset or market.

DO NOT BE AFRAID TO ALTER YOUR STRATEGIES AS TIME GOES ON

Life is not static and your goals or long-term viewpoints may well change over time. This may mean that it might make sense to change your investment strategy too. This doesn’t mean that you were wrong the first time, it merely means that what was right for you before no longer makes sense to you now. You may have been pursuing high risk high yield investment opportunities before due to a need for quick cash, but, after achieving those goals, you may now want to put those profits into slow burning investments in order to reduce the risk of losing it due to the fact that you now need the financial security more than before.

MAKE SURE THE SELLERS ARE LICENSED

Make sure someone is licensed to sell investments and that they have a valid securities license. Also, unscrupulous brokers and con artists will bypass state registration requirements to sell fraudulent investments. Be aware and do your research with the Secretary of State’s office.

DO SOME RESEARCH ABOUT ONLINE FRAUD

This is something which is real and it can happen to you. Online boiler rooms are being used to lure investors into classic “pump-and-dump” stock schemes, and they’re getting more and more sophisticated. Make sure you do your research and investigate as much as possible before investing with online brokers. Don’t let greed play into their hands. Investment opportunities which seem too good to be true generally are frauds.

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