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I found these in some of my investment reading… another good set of 10 rules<\/p>\n
These are helpful for beginning and seasoned\u00a0investors<\/strong>\u2026 They’re a great\u00a0reminder<\/strong>\u00a0about the most\u00a0important things<\/strong>\u00a0to understand when it comes to \u00ad\u00ad\u00adthe\u00a0market<\/strong>.<\/p>\n 1. You aren’t going to get rich overnight through investing.<\/strong>\u00a0<\/em> 2. Start small. That keeps your investing “tuition cost” low.<\/strong><\/em><\/p>\n I don’t mean “tuition cost” in the traditional sense\u2026 I call your “investing tuition” the money that you inevitably lose on your first investments because of something you didn’t know or understand. Start small, and keep that tuition cost low.<\/em><\/p>\n 3. Don’t invest in something you don’t understand.<\/strong> 4. What’s a good return these days?<\/strong> 5. Where should you invest now?<\/strong> 6. Don’t put all your eggs in one basket.<\/strong> 7. History repeats \u2013 or at least it rhymes.<\/strong>
\nA proper investment is\u00a0one<\/strong>\u00a0that has at least a two-year<\/strong>\u00a0horizon<\/strong>. Said another way\u2026 Any investment that can double your money in a\u00a0month<\/strong>\u00a0is likely risky. You could lose all your money just as quickly. If you don’t adjust your thinking in\u00a0line<\/strong>\u00a0with this, chances are you’ll end up losing a\u00a0lot<\/strong>\u00a0of money.<\/em><\/p>\n
\nOne of the fastest ways to lose money is to put your funds into something you don’t really understand. If you don’t understand how you’ll make money on the investment \u2013 and you can’t point out your risks \u2013 you are not ready for that investment. Go study some more. And if you still don’t understand, simply skip that investment.
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\nIs 5% a good return? A decade ago, 5% was a bad return\u2026 But today, 5% is (sadly) a good return on your safe money. That’s because banks today are paying near-0% interest. And you get paid less than 2% for putting your money away for 10 years. Any more than that and you are taking on real risk.
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\nYounger investors (under age 50) should focus their learning on property and the stock market. Both property (in Florida, at least) and stocks are the best values they’ve been in decades (with the exception of the March 2009 bottom in stocks). I could be wrong. You could lose money. But I think these are your best shots at making “real” money investing in the next three to five years.
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\nDon’t put your entire net worth in one property\u2026 And make sure you spread your stock holdings around as well by first investing in funds that hold a bunch of stocks. Something like the SPDR Dow Jones Industrial Average Fund (DIA) \u2013 which holds 30 stocks, including IBM, ExxonMobil, and Wal-Mart \u2013 is a good, “one click” way to own a basket of stocks.
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\nIt’s amazing how investors never learn that history repeats. The recent bust in property prices is a good example. In 2006, people thought property prices could never go down. And now, people think property prices can never go up. The truth is somewhere in between.
\nKeep in mind\u2026 you want to SELL an investment when it’s expensive and everybody loves it (like housing in 2006). And you want to BUY an investment when everybody hates it (like housing today). But\u2026
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