Investing Rules For Success: It’s Not Rocket Science

Investing is not rocket science! Anyone interested in learning fundamental rules and recommendations for making long-term investments can become a successful investor.

Saving is not investing. Although leaving your money in a savings account may be the safest, investing in stocks provides appreciably higher returns over the long term.

Their returns typically exceed the inflation rate. Make your money work for you by saving it and deploying it into investments.

1. Avoid Short Selling

The danger to short-sellers is that they are wrong, and they could be facing unlimited losses if the stock continues to rise. That particular security could be anointed a favorite among the street, misunderstood, or getting a generous buyout offer.

When financial markets are volatile, brokers make margin calls, which boosts the losses suffered. The higher the amount borrowed, the greater the risk. Given these risks, I have always avoided using margin to buy stocks.

2. Don’t Buy On Margin

Stocks will pause, reverse, and sometimes fail over time. After a few of these experiences, where my gains disappeared, to be replaced by eventual losses, I changed gears to take small profits at a time.

3. Don’t Be Greedy – Some Discipline Is Needed

Don’t chase these stocks after their initial pricing for a while. Statistics show that in the long run, IPOs tend to underperform. There are several reasons for these stocks to do poorly one year after the IPO.

4. Don’t Chase IPOs Right After Its Pricing

5. Learn As Much As You Can

Never stop learning. There are many opportunities to learn about different kinds of investments, philosophies, and strategies, and resources are readily available.

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