1. Understand the Stock Market
The more you understand, the more you'll knowwhat to do with your investment.
You should...
{Read books that can give you the big pictureon how the stock market works. Then browse websites thatoffer stock trading simulation for you to practicewhat you've learned. As much as possible, familiar yourselfwith all the terms and systems used in stock and othersecurities trading.}
2. Find out all You can about your Broker
It is absolutely vital that you completelytrust your broker and have faith in thesecurities firm that the dealer represents.
You should...
{Your trading in the stock marketwill be carried out through astock brokerage firm which is a memberof the stock exchange. Make sure youchoose a reputable and reliable broker.}
3. Set long-term Goals
Long-term investments to yield betterreturns over time than short-term ones.
You should...
{The stock market is designedfor both long and short-term investments.However, while occasional market crashescan wipe out the short-term investors,those who set their sights long-termcan expect to recover and grow the valueof their investments over time.}
4. Invest only a Portion of Your Earnings
Investments have an upside as well as downsidepotential. Always remember that you have risk ofloosing that investment.
You should...
{There is no such thing as a risk-freeinvestment. Determine how much moneyyou and your family will absolutelyneed for living expenditure,decide how much you want to save,and then only use the remaining moneythat you have for your stock investments.}
5. Choose the Company You Invest in Wisely
Get informed knowledge and advice onthe companies that you decide to invest in.
You should...
{You do not have to be a financialanalyst to figure out the balancesheet of a company, but it will helpif you have rudimentary(inside and outside)knowledge on how if not, go to someonewho does. Understanding how companiesperform and their future prospectsis crucial to stock investing.}
6. Diversify Your Holdings
No one should invest all their moneyin just one industry or one asset category.
You should...
{In the stock market, as in the real world,different industries cannot be expectedto shine at the same time. At any givenyear, some industries will perform well,others not so well. By deversifying ourholdings, we reduce the risk of beingexposed to the poor performance ofany one industry or asset category.
7. Avoid Market Timing
There is no full proof system topredict when is the right time tobuy or sell stocks.
You should...
{Most successful investors do not watch themarket constantly in order to buy 'low' and sell'high'. Nor do they perpetually move in and outof different stocks. If there is indeed a full-proofsystem of predicting where the market will go, wouldn't you think that everyone will be richfrom the stock market by now?}
8. Prepare Yourself for Good and Bad times
Even the Best Managed companiescan have their bad days.
You should...
{Even after you have taken every precaution,and followed the advice of every expert in themarket, there will be times when you will losemoney on your trade. You simply cannot winor profitable on your investments all the time.So be prepared for the bad times and don't letemotions get the best of you.}
9. Remain Focused on Your Goals
Remember your long-term plan and neverlose the focus of your goals overtemporary events.
You should...
{Unfolding events, however disastrous,may just be temporary in nature. In otherwords, stock markets have always recoveredfrom crashes, no matter how large they are.So, unless you are in the marketfor the short term, hold on to your investmentsand give a chance for the market to recover.}
10. Review Your Needs from time to time
We should review our investment strategies from timeto time, to adjust to changing needs or new opportunities.
You should...
{Sometimes our financial needscan change from time to time. Or newinvestment opportunities may arise.Good investments often requireflexibility even as we remain focusedon our long-term goals.}
11. Beware of investment scams
Don't be taken by investment offerswhich appear highly appealing, but whichyou know little about.
You should...
{The stock market has its share of scamsand fraudulent activities. Even when the stockmarket is not to blame, there are companiesthat are driven to ground by bad management orembezzlement. All these can harm your investments.So, do your due diligence and never act withoutsound knowledge.}
12. Continue to Learn as You go
Investing in the stock market can be a lifetimelearning. If you want to save money, learn fromthe mistakes of others.
You should...
{No matter how knowledgeable you may be aboutthe market, it always pays to seek for and listento professional advice. Remember that if you makeunwise decisions in stock investment, you couldend up losing some or most your investments.}
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Rabu, 10 Juni 2009
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