By eToro

The Seven Golden Rules to Wise Investing

The entire process of investing can be made easy by following the seven golden rules to Sage investing.  Beginners that would like to learn how to ‘play’ the stock market will find that by following these seven rules, it will feel less like gambling and more like business.

Rule #1: Education

Start with the basics in the learning curve to investment success.  Acquire a firm grasp of basic accountancy principles to begin, and then learn how to read and assess annual reports and stock market history.  It is imperative to understand the scoring system.

Rule #2:  Invest in Investment Software

Do your research and learn to empower your position with two types of software.  One is for personal money management and will keep track of costs for subscriptions, stockbrokers, profits and losses.  The second will be utilized for technical and fundamental analysis, tracking stock and fun prices, storing company information and more.

Rule #3:  Take it Seriously

The stock market and investing is very competitive, and should be considered a business.   This is not gambling, so take it seriously.  Gain skill by clarifying questions such as “Will this trade, software, subscription, or investment make money or lose money?”  Understanding the profit and loss of the company as well as your own will lead you to more skilled decisions.

Rule #4:  Broaden Your Horizons

A broad-based education in corporate finance, personal finance, economics, taxation, and investment theories will help, but do not necessarily seek to be a ‘jack of all trades’ in the investment arena.  Rather, excel in a few areas of the world or business and apply that expertise.   Once these areas are located be sure to spend time each week staying current and abreast of news and information regarding your ‘area of expertise’.

Rule #5:  Locate a Good Investment Service

While it may not come cheap, it will certainly become valuable.  Choose a stock market service in which to subscribe and profit while learning the ropes.  Services available offer assistance with picking stock, trading and portfolio management, and educational services.  The up- front cost of the service can be absorbed by profits if things go well.

Rule #6:  Manage Money Well

Every investor will encounter loss and for this reason it is crucial that investors understand the vital concept of asset allocation.  No one investment or individual holding should wipe out an entire portfolio.  The key is effective allocation and expert investors may not share tips and tricks of the trade, but they will share this – the way in which you allocate your investments is key to long-term success.

Rule #7:  Practice, and Practice Some More

Prior to real-time investing become familiar with the stock market, and a few companies in particular.  Note why you like them and then follow their stock.  Watch, and learn whether your decision would have made money, or lost money.  Chart the movements of the stock market and the companies that you are watching each day, manually, because comparison counts.  Forego the computer software that tracks the movements for you and remember, this is a learning curve.  Get back to basics and use this manual exercise as an experience that will give you the ‘feel’ for movements in price.


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