Since I started investing in 2010 I have had some successes and many failures along the way. As a way to protect myself from speculation and “get rich quick” investments, I came up with a list of rules that I try to follow. Please know that these are not hard and fast, and there will be occasions to break from them. However, using them as guidelines has proven successful for me, and if I am planning on deviating from this strategy, I will have a concrete way to evaluate just how successful my deviation was by referring back to the rule I broke in the first place.
Here are my 11 rules:
- There are two ways to lose money in the stock market: 1) Selling below the value at which you bought. 2) The company in which you invested goes bankrupt
- Do not sell below market value
- Do not purchase stock in a company that is likely to go bankrupt
- Use time as a hedge against uncertainty
- Buy frequently, sell infrequently
- Avoid unsolicited “stock tips”
- Do not try to “time the market”, instead buy at regular intervals. “Time in market beats timing the market”.
- Develop a budget to determine how much you should invest each paycheck, then invest that much each paycheck
- Track your progress daily to determine trends and top and bottom performers
- Shop for stocks like you shop for groceries: look for deals and avoid “buying at eye-level”
- Grow your wealth when you are young, preserve your wealth when you grow old
The Investment Club 