Below are some pointers to be able to invest safely:
1. Goals and targets. Determine your objectives for investing.
Are you there for long-term growth of capital, or for the short-term and quick cash? Your objectives will greatly influence the types of stocks you wish to purchase.
2. Do Your Homework.
It is very important that you investigate and research a stock before investing in it. Some research and studies go a long way in securing your capital. A combination of the facts, plus the different opinions of several brokers and/or investors, will enable you to make a more sound judgment.
3. Beware of Hypes in the Market.
A good number of investors have acted quickly based upon rumors and tips, which could not be verified, and have lived to regret disastrous results.
4. Cut Your Losses as Quickly as Possible
In investments, one must be prepared to make errors in judgment about a stock. More important is being able to act quickly and to conserve one’s capital for other opportunities.
5. Diversify Your Portfolio.
An individual should never put all of his funds into one stock, no matter how attractive the possibilities are. While it is true that some fortunes have been made in this way – the reverse situation is more than often the case. The temptation of putting everything into one stock, especially when it is moving upward, is very strong. But it should be avoided.
6. Lock that Gain.
Nobody ever became poor by taking a profit. As a stock continues to rise in price, the great majority of individuals hesitate even more about selling. Frequently, even when the price has gone up beyond their original expectations, they continue to hold out for that extra bit of additional profit. Greed, which is a normal characteristic, has been the cause of much disappointment in the stock market.
7. Patience is a Virtue
The stock market is a challenging field to master. The individual must not become discouraged easily. There is only one way to learn, and that is by doing. Nothing can take the place of actual experience.
8. Learn from Your Mistakes
Some of this experience will be costly, but at least it should serve a purpose: that of enabling to learn by past mistakes. A little time and effort spent in studying investments seriously will frequently be very rewarding, financially as well as personally satisfying. We would urge the investor who is coming into the market for the first time to seek advice.