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Laws of Investing in Shares

Updated on January 15, 2011

Laws of Investing in Shares


1. Never invest more than you are prepared or can afford to lose


2. Never invest in anything you don't understand


3. Never put more than 10% of your money into any single investment. Diversify by choosing several different investment types e.g. shares, property, business; or industries e.g. health, finance, property.


4. Don't jump into an investment out of fear of losing an opportunity. Use logic.


5. When investing in shares always have a stop loss (an amount you are prepared to lose e.g. 5%)


6. Always have an exit strategy. Work out what the upsides and downsides are.


7. Always buy when there is weakness in the market and sell when the market is strong.


8. Do not get greedy. If the investment is overvalued get out.


9. Protect your profits with stop losses. When the share price increases increase your stop loss.


Happy investing.


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