Tips for new investors
Investing in the stock market is not for the faint of heart. If you want to invest in the stock market, but have no idea where to start or how to decide what to invest your money in, you are not alone.
Here are some rules to help you and guide you toward making the right decisions.
To start you need to build a foundation. You need to have a job and a roof over your head before you spend money investing. There are some exceptions, such as borrowing and saving at the same time, in pension schemes.
Start out with low-risk options, cash in a bank account with a decent interest rate. Then buy bonds or commercial property. Then you can start buying shares in the stock market.
The best way into shares, for most people, is via an investment fund. With funds, lots of people invest together and spread the risk. Be patient. Good results are worth waiting for.
Bill Gross, the founder of PIMCO, the Pacific Investment Management Company, one of the world’s largest investment companies, said: “You must work intensely to keep your investment expenses as low as possible.” Fees and charges may mount up.
“He who wishes to be rich in a day will be hanged in a year,” said Renaissance man Leonardo da Vinci. Get-rich-quick schemes are as useless as they are commonplace.
Little can be achieved unless you are prepared to run some degree of risk. As Emperor Napoleon Bonaparte observed: “If you risk nothing, you gain nothing.”
Spread your money around. Don’t put it in just one bank or all in property or bonds. Diversify.
Ask questions. It is hard to overestimate the importance of being inquisitive and of asking impertinent and/or seemingly obvious questions.
Manage your risk and keep your fingers in a lot of different pies.
Last of all, Warren Buffett, a stock market guru whose fame matches his status as an investor par excellence, says that the most important rule of investment – his first rule – is not to lose money. “Rule number two,” says Buffett, is, “Never forget rule number one.”