The 5 Golden Rules of Investing Success

There are many more people watching share prices than investing in stocks. Most realize that investing is the way out of living from paycheck to paycheck, but do not know where to start. Stocks and shares seem to be the reserve of the rich; a risky business where the novice loses their shirt. But there must be away to get started without getting burned? Here are five rules to stock market investing success to get you started.

Rule 1. Get online and research not only the companies that you would like to invest in, but also the investment firms that you may want to partner with.

Many websites and investment firms provide investors with free stock market tools that a few years ago would not even be available to the professional fund manager;
     Real time share prices.
     Fundamental information.
     Portfolio tracking.
     News.
     Opinion.
     Many more free services!
These free services let you make highly informed financial decisions on what share to buy and when to sell them.
Researching your stock market investments might seem like work. That is because equity investing is work.
Sadly investing is not a short cut to wealth, you need to treat it like any other way of making money -with focus and determination. Hopefully you will find it a lot of fun and more like a pastime than a chore.
Just as you cannot do a crossword without a pen, you shouldn’t invest without the best stock market tools which are online these days.
Fortunately, fully-integrated investment firms such as Global Securities Corporation can help you with equities, fixed income, commodities and risk management products.

Rule 2. Limit the size of any individual investment.

Until you own at least 30 different companies’ shares, never buy more than $10,000 worth of any share.
Risking too much on any stock investment is a recipe for disaster, even for the sophisticated stock market investor. Keeping your individual share investments small keeps your capital pot safe and lowers the stress that can make investing unpleasant. Once you have 30 stocks you can grow the scale of each investment, but until that day stay diversified.

Rule 3. Diversify. Build a stock portfolio of at least 30 different investments.

Take no notice of the people that say put all your eggs in one basket. A portfolio gives you a certainty that bad luck won’t hurt you and that your choices on average will deliver the return your share picking deserves. This portfolio return over the years will outperform anything a bank will offer you on deposit and will compound.
A diversified portfolio will mean you will miss out on good luck, but investing isn’t about good luck. Bad luck and good luck cancel out over time but if you have too much of your money in too few shares then bad luck can knock you out of the game.
This is called ‘gambler's ruin’ and the way to avoid by having a portfolio.

Rule 4. Use research reports and your own common sense.

Unsurprisingly, the markets are fluid and there are many different ways to analyze investments. To be successful you need to be constantly on the lookout for new methods; old ones are always eaten away by the efficient market.

Rule 5. Invest in shares for the long-term.

Buy shares you think you will hold for three or more years. When the world’s most successful investor, Warren Buffett, claims sloth as his most profitable investing trait you should take note. Slow and steady wins the stock market investing race.
Value investing is a great skill to learn.
Put your investing money in an RRSP or TFSA and let the profits roll up tax free. While interest from the bank is taxed, using these tools can protect your stock market profits and dividends from tax; one more reason to let the long-term take hold.
Just remember, by the time you can afford a Ferrari from stock investing you will be too old to want one.
You think that’s bad? Perhaps you should wonder if you have any other way to get Ferrari rich at all, before you worry how long it will take.
If you can see stock market investing as a part time job from now until retirement you will do very well indeed from it; it is the short-term speculators that usually get burnt.

Investing is how the average investor can get rich slow. It is one of the few ways available to an average fellow, but because it takes hard work, discipline and time, not many people sign up for it.

If you really care about your finances and your long term prosperity it is always a good time to start investing. It is a long road, but a profitable one.