Investing For Beginners – Free Investment Articles and Tutorials

What is the amount that I should invest in the stock market? How can I make sure that I don’t suffer losses? How do I pick the right stocks? These are some of the questions that a new investor asks. No one can answer these questions. But you can surely do well if you keep in mind the following five tips:

1. Do not put all your eggs in one basket. Instead of investing all your money in one share, buy at least half a dozen shares. The losses caused by the down slide in one share will be covered by the gain in other shares. Also, try and buy these shares across different market segments. This will once again protect your investment because a fall in technology shares may be made up by a rise in pharmaceutical shares. It is very rare when all segments of the economy crash together.

2. It is always wise to start investing at an early age. The advantage is that you will gain more if you let your investments grow. Historical data suggests that all stock prices go up over a period of time. So, don’t be in a hurry to sell. Also, since age is on your side you can hope to make much more than those who make investments at the end of their lives – and cannot hold on to their investments long enough.

3. You must invest in companies that you know. These are the safest investments, and deliver the best results over time. You must remember that these companies have become household names only because they have followed good management practices. They can therefore be trusted more than the others.

4. Allocate a small sum of your investments in what is known as the dollar averaging or systematic investment plan. Under this plan, you buy shares when the market prices are low as well as when they are high. You don’t stand to loose because the highs and lows average out.

5. Don’t retain stocks that are falling. Bail out as quickly as possible. This will cut your losses. Similarly, hold on to stocks whose prices are going up, and will add to your gains.

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