The 10 Commandments Of Investing In The Stock Market For Noobs

Commandment # 1: Do Thy Homework!

Listen, these days you simply need to be more self-reliant when it comes to investing in just about anything, let alone the stock market. Take some time and really study the different kinds of investments you can make, types of assets…the basics. The surest path to not being a noob is self-study and self-instruction.

Commandment # 2: Humbly Approach Risk at First

As they say, you shouldn’t spurn risk altogether, but you shouldn’t be an investor-type adrenaline junky either. Try to balance extremes, especially when you’re dealing with higher risk investments.

Commandment # 3: Stray from the Masses

In case you haven’t been paying attention, conventional is definitely out of style. When investing you must avoid herd mentality like the plague! If you want to have industry professionals take care of everything for smaller returns, that’s fine. But, if you plan on being a Lone Ranger active portfolio investor then first see #1 and #2.

Commandment # 4: Set Precise Targets & Reasonable Goals

No winging it! You need to approach investing with very clear goals and expectations. Why are you investing? What’s the short, medium and long term goal? The answers to these questions will guide your investment decisions so they mean everything. Without them you’re like a ship at sea that’s lost its rudder.

Commandment # 5: Start Small to Build Big

If you’re an active investor that wants to determine their own destiny, begin your journey with a careful easy step. Don’t unload your whole nest egg. Don’t make amateur make it or break it moves. Make small moves, but once you’re confident be open to great opportunities with a bit more risk. In fact, start with small risk and through time feel free to increase it a bit. Just be careful.

Commandment # 6: Remember, Patience is a Virtue

Options are one thing, but in general in order to be a successful investor you’re going to need to be patient! Think about it, biding your time with investments actually pays for itself. Don’t bounce all over the place or keep making flash decisions on the happenings of today. Stick in there, be patient and harbor a more long term “cool” approach.

Commandment # 7: Don’t Get Addicted

Relax. If you find yourself huddled in a dark cave of a room staring at your computer screen all day. Or you become obsessed, then relax and back of a bit. Don’t get “too” into investing when you begin, or ever really unless it’s literally your day job. Yes, you’re going to experience some wins and some losses. Just relax on both occasions and don’t get swept away.

Commandment # 8: Compartmentalize Your Investment Life

You shouldn’t be checking your email or staring into your smartphone every 5 minutes watching the market or your portfolio. Keep investing in its own compartment within your life. You need friends. You need a life outside investing and yes it’s necessary to say this because there’s so many people that go overboard and let the casino swallow them whole.

Commandment # 9: Assess and Address Your Debts!

If you’re neck deep in high interest debts then those are your first priority before investing. Ideally, you should have as much debt taken care of as possible excluding long-term loans like a mortgage or student loan. Pay off your credit cards. Pay off your car if that’s plausible. Get thy financial house in order before you attempt to build a new foundation. If required, consult an MBA specializing in such type of analysis.

Commandment # 10: Don’t Idolize or try to Mimic other Investors

Yes, these big name titans are awesome and inspiring. Sure, wouldn’t we all like to be a Warren Buffet, but we’re not. We simply aren’t. Play it smart, listen, take what you need, learn, etc. But carve your own path to financial security.

That about wraps it up. You can get more specific of course, but in terms of the noob investor heading out into the jungle, these 10 tips pretty much cover it.

By Ali Asjad

Ali Asjad is a content strategist based in Stockholm, Sweden. He helps companies in vast and varied verticals be more successful and visible online. Circle him on Google+ to further the conversation.

Comments

  1. If I can recommend anything regarding investing for beginners, it’s your number 1: do the homework! Personally, my absolute favorite intro to investing is Joel Greenblatt’s “The Little Book That Beats The Market.” It’s excellent.

  2. Interesting post…you mentioned a lot of good points. I especially like commandment #4 and practice it religiously in my personal life. In fact, I would even say that having goals is one of the key reasons why I am where I am today. The goals have helped me achieve success with my financial, career, fitness and other personal achievements.

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