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What is the best way to invest money in stock market ?

Updated on March 17, 2009

The Three Rules

Coming from someone who had excellent credit, to well, the worst credit, I can say that I have quite a bit of knowledge regarding finances. One thing that I’m good at, is stocks. In times like this, BUY BUY BUY. It’s a buyer’s market right now, baby. If you want to invest, this is how you do it.

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RULE NUMBER ONE:

Most important rule of all- DON’T put all your eggs in one basket. Because if that stock goes down, you lose everything. Be diverse. Invest a little in a lot of stocks.

RULE NUMBER TWO:

Know your company- Don’t just pick any random company; do some research. Know something about the company you want to invest in. When they make changes to the company, that’s usually a sign to tell you when to buy or sell. An example would be a change in management- you might want to sell. Maybe the company is growing and the stock is getting to be pretty high, then they’ll do something called a stock split. You know what that means? That means buy that freakin' stock before it splits! For example, if you buy100 stocks where you invested a total of $500, after the stock split, you will then have 200 stocks with a total investment of $500. Because of this, you double your stock, you don’t lose money, and now since the stock is cheaper for everyone else, everyone else is going to buy, THEN you’ll see the stock go up. Also, check out websites such at yahoo financial that has detailed information about every stock so you can keep up on each company.

NUMBER THREE:

In bad times, don’t sell- Hold it out, things will come back up. However, sometimes you know when enough is enough. You can sell before you see too much of a loss but if you already lost hundreds or thousands, just wait it out.

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Want a little practice? Go to www.stocksquest.com and create a FAKE account to buy and sell stocks. It’s the real stock market but you’re just not actually investing. It’s a great way to get the hang of the business. Train yourself on when to buy and when not to buy. It’ll give you information on you losses and profits. It’s truly an amazing website and I encourage everyone to try it.

Now, there are many terms and legalities when it comes to stocks but these three rules are the foundation. If you’re truly interested in stocks, talk to your employer about 401K or talk with a financial advisor at the bank. All this information you can find on the web, so this article isn’t anything new but if it helps someone out, well, hey! All the power to you! Keep in mind, during this financial crisis, the best thing to do right now is buy because with the next year or two, those stocks will be slowly climbing back up. This is the best time to invest in 401K. Just remember to be diverse.

 

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    • profile image

      Stock Market 

      6 years ago

      very good post, i was really searching for this topic as i wanted this topic to understand completely and it is also very rare in internet that is why it was very difficult to understand

      thank you for sharing this.

      Regard

      Stock Market

    • Ding.A.Ling123 profile image

      Ding.A.Ling123 

      9 years ago

      I tried to add some important aspects that I didn't think you covered. Wasn't trying to copy you at all.

    • hubber-2009 profile image

      hubber-2009 

      9 years ago from India

      i think the bottom is near by, is a really good time if you invest on cheap and safe stock on long term i suggest you should buy C, and BAC because government will never let these big bank fail and eventually it will double or trip your money

    • Ding.A.Ling123 profile image

      Ding.A.Ling123 

      9 years ago

      Nice job!

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