This is such a broad topic it's difficult to answer. You will get a different approach from each investor you ask. Some will tell you to buy and hold. Some will tell you to day trade.
The best thing I can say is that if you're trying to retire on this money invest on something that will grow with time. If you want to use this money as a source of income then day trade for quick turnaround money. Of course that is just my opinion. I don't have any economic degrees, just experience from trading for the past 4 years with some good returns. I am young so I can take more risk with my investing. I tend to trade and only hold onto a stock for a few weeks, max. You might want to look into high paying dividend stocks though. They aren't a bad place to start. If you lose money on the stock, at least you will get some money back through the dividend.
As far as precautions go, know when to get out. Set a limit that you know you want to bail and stick to it. That's about the only precaution I have. Unless of course you consider the fact that you need to know your level of risk, but that's just a given. If you're older you shouldn't have as much risk as a young kid.
Hope that helps!