Investing Tips For Beginners

While experienced investors who have enjoyed both success and failure through the stock market may bristle at the comparison, investing is a lot like Kenny Rogers asserted in "The Gambler" - you've got to know when to hold them, know when to fold them, know when to walk away and know when to run.For the new investor, here are some tips that might help him or her get started.

As with any skill, investing takes practice.There are some programs based on real market information that the beginning investor can use without risking any money.It is a great way to hone investing skills and acumen while keeping money relatively safe.The only problem is that the beginning investor may hit a home run on the first investment and go into the real investing world overconfidently. Overconfidence is a good way to lose one's shirt.

An investor must research not only the companies that he or she is interested but also the industry in which those companies are involved.Knowing as much as possible about a company, its management and what it does differently compared to other companies in the sector gives the investor a head start in knowing whether or not the company is viable.By knowing the strengths and weaknesses of a company vis-à-vis its competitors, a savvy investor can decide whether the company is worth the risk even when holding the stock while it is falling.

Investors must be aware of how much money they can lose.Every investor will lose money in the stock market.It is part of the game.The trouble comes when the investor loses more than he or she has.Avoiding buying on margin or using a low rate loan to invest can help the beginner not get in over his or her head.

An investor must decide whether the investment is long term or short term.These two different types of investment may bring about to different types of strategy.Many expert investors use a buy and hold strategy believing that short term gains and losses are to be ignored because of the historical rise in the stock market and its implications for a long term investment.

Evolve an investment strategy.Not all investments have to be in stocks.There are commodities, bonds, precious metals and other investments that can be made and each one has its advantages and disadvantages.Diversifying a portfolio will help insulate it from losses in one area because other areas tend to go up in value to compensate for the losses in another sector.Stocks may fall, but that is when gold will increase its value.

Don't get attached to an investment.Every investment carries with it a risk of loss.Investors need to figure out what amount of loss they are willing to accept before selling the stock and issue a sell order for that level.If the stock reaches that level, the stop loss order will trigger a sale and the investor won't lose everything.Of course, if it was a temporary dip for an otherwise solid stock, the investor will lose any gains after the order is executed, but the idea is to mitigate risk while maximizing profits.

Ignoring the experts is a big step for every investor. People on television shows or who dissect the stock market for a living are not experts in everything.If an investor knows more about the potential of a company, he or she sometimes need to just get in and trust that his or her knowledge and instincts are right.Many beginning investors have missed out on doubling their money because an expert told them that there were better stock picks out there.