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The Top Ten Golden Rules Of Investing

If investing in the stock market seems like something that is beyond your grasp then I’ve got just the advice for you! The fact of the matter is, investing doesn’t have to be as difficult as you may think and today I want to discuss my ten golden rules of investing.

The first rule is to not be intimidated by professional investors. Many people think that it’s impossible to win when you’re investing against professionals who do it every single day but the fact of the matter remains that individual investors have a better chance than ever because the pros tend to act with a herd mentality that can get them into trouble.

My second rule is to invest in what you know. Look around you at the things that you experience every day in your daily life. What products do you use, what services do you use, and what companies do you run up against on a daily basis? Invest in things that you’re familiar with and you’ll have better luck.

Third, don’t invest in anything you can’t explain to your 12-year-old child.

Fourth make sure you have the right temperament for investing. Stocks go up and stocks go down and if you’re worried about the swings in price, you may sell when the stock is down and miss out on the upside.

Fifth, stay away from hot trends in hot new industries. It’s always tempting to jump on the bandwagon and chase the newest coolest thing but this may not be the best bet for the long run. And you may not be on the inside track to know when the fad has ended!

Six, don’t buy more stocks than you can handle. I know that it’s popular to diversify and in order to diversify properly you have to own many different stocks in many different companies but if you spread yourself too thinly then you may not be able to do the proper analysis on each stock that is necessary.

Seventh, don’t try to predict the future, especially of macroeconomic events like interest rates and government policies. Nobody knows what can happen in the future and to try and time the market is just not going to work in most cases over the long run.

Eighth, don’t worry over the weekend. Stock markets are closed over the weekend which leaves you a lot of free time to think about the choices you’ve made during the last week and begin to second-guess yourself. When Monday rolls around you’ll often have talked yourself out of that stock you just bought last week.

Ninth don’t ever invest in a company unless you understand all of the figures from its balance sheet and income statement. Analyzing a company’s financials takes more time but is absolutely necessary in order to get the whole picture of how sound a company really is.

Finally don’t expect too much too soon. Investing in the stock market should be a long-term thing for you. If you focus on daily or weekly gains you may be disappointed which may cause you to sell, which may cause you to miss out on longer-term gains.

So there you have my top 10 Golden rules for investing!

-Article Written By Jason Markum

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