3 Simple Money-Making Rules for Stock Investors

There are lots of different ways to invest and so many companies to choose from. It can become overwhelming, especially for a new investor. 

If you are new to investing or are thinking about getting into the stock market for the first time, there are three things I believe everyone should know.

Think simple

The stock market can be confusing and overwhelming, even for experienced investors. That is why it’s best to try and keep things as simple as possible.

That means look for companies that are in your wheelhouse and easy to understand. The last thing you want to do is buy a company just because it’s a hot stock at the time.

Chances are, you don’t understand the company well enough to own it. It could be way overvalued.

An overvalued stock may look great at the time, but you could pay for it down the road if the valuations don’t hold up. 

Think long-term

It can be easy to get sucked into the ebbs and flows of the stock market. You can even make a lot of money in a short period of time.

However, quick money shouldn’t be your strategy, especially if you are new to investing. 

I believe the best way to think when looking at companies to buy is long-term. You aren’t looking to turn $1,000 into $10,000 overnight, although that would be great.

Intead, you want to think about how that $1,000 will look in 10 years, and even beyond that. 

If you get great companies at good prices you will be reaping the rewards for years to come without the extreme risk and potential volatility that comes with trying to get rich quick using stocks. 

Think the opposite

Just like humans, the market is emotional. One day the index can take off like a rocket and then the next it could drop like a rock.

However, if done correctly, you get to buy wonderful companies on sale while everyone else is selling and running for the hills. 

The idea here is to sell when everyone is buying — and buy when everyone else is selling. 

Think about it: If people are selling off a stock that means the price of that stock will start declining. If this is happening with a stock that you have been watching and want to own, this is good news. 

On the flip side, if people are buying up a particular stock, then that price will go up.

This is great if this is happening for a stock that you currently own. That means you can sell, if you choose to do so, at a higher price than you bought it.

Buy low, sell high. That’s how you make money. Too many people fail by chasing the crowd the wrong way, over and over.

Recommended Articles

Delaying Retirement Can Potentially Delay Dementia

They say that retirement should be viewed as a new life adventure. But it is really a budgeting lifestyle for post-working life. And there are a lot of considerations to

Attention Ladies: These Herbs Are Important to Your Health

Women have so many demands on their bodies and minds that any relief is a blessing. That is why you need to start taking these herbs to help increase your

4 Rules That Will Bombproof Your Retirement

Financial markets often are directly correlated to the macroeconomic, social and political factors far out of our control. Herds of investors are prone to reacting in extremes whenever these macro

4 Types of Retirement Income That Will Be Taxed

As well all know, expenses may change from one year to the next, and the amount you spend may change throughout retirement as well. That's why, for many current and

Study Finds Risks of Two Commonly Taken Antidepressants

Depression is a serious mental illness — one that affects more than 15 million adults in the U.S. For some women, pregnancy can bring about new depression symptoms, or worsen

Live Near Water? You Probably Paid Too Much for Your House. Here’s Why (Map)

Even a cynic recognizes that opportunity is a key to prudent business timing. Consider home buying. If you’re in the market for a new home, and are informed and discerning

3 Reasons to Should Avoid Life Settlement Policies

Most Americans don’t take life insurance for granted because almost one out of every two Americans don’t have it. According to the Insurance Information Institute, only about 54% of Americans

Feeling Hangry? How to Avoid Food-Related Mood Swings

Food that you eat is processed into simple sugars, free fatty acids and amino acids. The nutrients are moved into the bloodstream where they are assimilated by organs, tissues, and

How to Put Your Investments On Autopilot — and Win

Are you committed to investing a part of your monthly income towards retirement? You can insulate your financial future against unforeseen emergencies and economic risks if you use an automatic

Best Time to Sell or Buy a Home? It Depends…

When's the best time to buy or sell a home? That's a great question. A lot depends on who you are, seller or buyer. Traditionally, the best time of year

6 Sneaky Habits That May Be Causing Your Overeating

Overeating? Many people vastly underestimate how many calories they consume in a day. Even if you believe you restrict your daily calorie consumption, you may be consuming more calories than

How Shark Tank Judge Barbara Corcoran Nearly Lost $400,000 — Just by Reading an Email

According to a 2017 FBI Internet Crime Report, individuals and companies lost over $5.5 billion between 2013 through 2017 due to email phishing scams. Email phishing scams are deceptive emails