Stocks for the long term can be very risky. Does a broker really care about your money? Or does he care about his commissions? I believe most people can do a better job than their brokers. Yes that means you!! You need to believe that you can control your own money. I know you can do it, with just a little guidance and a few tips. You need to take a few hours a week to study. The harder you are willing to work, the better you will be. Of course, that goes for anything you do in life. Here is tip number one.
The number one rule in stocks is `Don't lose your money'. This makes stop losses one of the most important things to know about and use. For example, what if we have a stock called
roseannstreasures and the stock is at $7 . Then you could put a stop loss at about $4, so you do not loss all your money, and you take the emotion out of the trade. Of course, you can use it at your own risk tolerance level. I'll bet that the people, that owned Enron stock, wished that they had utilized a stop loss. They would have at least protected themselves from losing all of their money. Stop losses are something that all investor should know about. Stop losses are something that should be used all the time, no questions asked. Protecting your money gives you a chance to try again. Tip number 2.
Try not to do more than 5 stocks. That way it is easier to keep track of your stocks, and you won't get overwhelmed. Study at least an hour a week, in your spare time, for each stock that you own or are considering purchasing . You just don't know what will happen 5 to 10 years from now. You have no Idea what the market is going to be like. To me, that is a gamble. I have a friend that has a Mutual fund that is making 80 cents after having it for 5 years. I realize that is just one person, but I am willing to bet that more people have that same mutual fund, and just wasted 5 years gaining nothing , and wasting time. Of course all funds aren't going to lose you money. But will it be enough for retirement? I would not take that risk. I will have more tips in my next article, you can also check out
coolmoney , there are great tips there.