Secrets and rules of an investor – How to start investing wisely?

If you are thinking of investing some of your hard-earned money in the stock market, you might be a little nervous.

Fortunately, you do not need to have the financial savvy of Warren Buffett’s level to be a great investor. You just have to follow some expert advice..

We talked about important investor rules that will help beginners improve their future portfolio and knowledge..

1. Stop looking at your investment

investor rules

Most people too often watch their stock investments. But remember that the abundance of data does not guarantee the availability of the best and necessary information..

In fact, the more often you check your stocks or shares in your investment portfolio, the more likely you are to start trading actively. In addition, it has been proven that frequent trading reduces investment returns. This activity can be especially harmful for your long-term financial goals..

The daily stock price fluctuations in most cases are just noise. Choose your investment wisely and hold on to the long term. When it comes to the market, easy and calm neglect is your friend..

2. Control your emotions

investor rules

Any investor rules cannot do without this advice. By far, the biggest danger to your stock investment is yourself. Letting emotions get in the way of rational thinking is the fastest way to do irreparable damage to your financial future..

The stock market has volatility. In addition, talking heads on financial television portray any additional volatility to create drama and improve their audience ratings..

By allowing stock price movements or television commentators to warm up emotions, you can cause panic and sell your investments at the most inopportune time. When the stock market falls, this is the best time to find new companies with great price offers. But this is also not the best time to sell shares of enterprises that have already been affected by falling market prices..

3. Stop following market time management

investor rules

Constantly trying to jump onto the stock market and then quickly exit it is a recipe for disaster..

In order to participate in market events on time, it is necessary to make not one, but two correct assumptions about the uncertain future. You will have to exit the stock market when prices are at the highest level, and then also return to the stock market when prices are at the lowest level.

If you look at the stock market chart over the past few years, it will be easy to believe that choosing the time in the stock market is easy. However, Warren Buffett rightly remarked once that “the rear-view mirror is always clearer than the windshield.” That is, we can evaluate events objectively only when looking from the future to the past.

It is much more beneficial for a long-term investor to leave their healthy investments alone and let them grow independently for several years..

4. Invest in the long run

investor rules

In the short term, you can never outplay computer trading in the stock market. Buying and selling securities using high-speed computer servers, often with the fastest fiber optic lines in the same building as the stock exchange, is now measured in picoseconds.

A picosecond is one trillionth of a second. Everything happens in an instant, and there is no option that you are smarter than computer systems that always run at these speeds. It’s good that you don’t have to compete with computers at all. Your biggest advantage over machines is patience and long-term horizons..

It is much better to invest in a good company, preferably one that is unlikely to lose stability and will remain at the same level for decades. This goal can also be achieved by using a stock exchange investment fund or an index fund that tracks the stock market as a whole. In addition, you can regularly check the best offers for new investors..

Despite the lack of guarantees regarding the future, over the past hundred years, prices in the US stock market as a whole have continued to rise. Of course, there were short periods of sharp decline, but in the long run, if you continued to hold back on the sale or even better, bought more shares during the recession, you would ultimately do yourself a great service.

5. Keep costs low

investor rules

Saving is what investor rules are based on. It doesn’t matter if you invest in stocks or index funds. It is always important to keep your own costs low. The more actively you present yourself in the stock market, the more money you invest in someone else’s pocket. Repeated purchase and sale of shares increases losses from fees, commissions and taxes.

Brokers, exchanges, and even Uncle Sam are more than happy to encourage you to trade more often. You will greatly benefit them if you actively buy and sell stocks. On the other hand, you benefit from the long-term storage of as much of your money as possible. Avoiding expensive financial products and refraining from activity in the stock market, you will keep more of your money in the long run.


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