Online Stock Market Investing, or How To Lose Your Money Fast

Money..... Money..... Money!

Now, I'm not a professional trader by any means and I've lost money in the stock market. I do however, manage a fairly hefty IRA that's my wife has had for about 15 years and an online trading account in my S. Corporation. They're both doing well because I'm following some investing rules I've learned over the years.

If you do currently, or plan to invest online at some point, these simple rules will help insure you don't lose your shirt and maybe even make you enough money to buy a whole wardrobe.

• Don't invest in risky investments that have the potential to make you a fortune or lose you a fortune depending on the whims of the stock with money you can' afford to lose. If you have some money burning a hole in your pocket nothing says you can't give it a shot. Just don't be disappointed if you lose some or all of it.
• Find a reputable discount brokerage company that doesn't charge an arm and a leg for trades. You should be able to make a trade for under $10 or less with a discount broker.
• Don't base your trades solely on tips from friends or family members, they're usually wrong.
• Do invest some money on reputable financial information. The old adage, it takes money to make money is pretty much true. Even in our affiliate marketing business it's almost impossible to go without spending some money on essential information, software or other items that give you the information you need to be successful.
• Keep some money in your brokerage account in cash. Once you become educated and more comfortable buying stocks it's always good to have some cash in your account to take advantage of a stock that has potential to increase in value.
• Never become attached to a stock. They all go down sooner or later. My policy is to sell any stock that drops 25% over the price I bought it at or the highest price it reached if it increased in price. I also never invest more than 4% of my entire portfolio in any one stock. That way, if one or more of my stocks drop by 25% my overall loss is tolerable. As a stock rises I raise the stop loss number to 25% below that amount. As a stock continues to increase over time, even if it drops 25% below the high point you will still see a profit. It's better to sell for a small profit than lose money because you waited too long.
• Take advantage of compounding. A proven way to Invest for the long term is to purchase stock in companies that pay dividends and that have increased that dividend every year for at least 10 years. These are usually larger companies with very stable balance sheets. Be sure to re-invest the dividends into more shares of the stock and start as soon as you can with whatever amount you can afford, even if it's $10 a month. An IRA or 401k retirement plan is the best vehicle for long term investing in my opinion. Then leave them alone until you're ready to retire. Even when the stock market goes down youre buying more and more shares with the dividends and compounding the value of the stock. Eventually all markets and all stocks of stable companies go back up.

Last of all. Nobody knows when the stock market is going to go up or down. If you find a financial adviser or financial news letter that tells you they do, run away as fast as you can. Besides, it doesn't really matter what the market as a whole is doing. What matters is what your individual investments are doing. Individual stocks can go up in a down market and down in an up market. They key is to make decisions based on sound economics and good information.

That's my non-professional, personal opinion about online stock market investing. You can wake up now!