WELCOME TO GARY’S RULES TO INVESTING
(FOR ENTERTAINMENT, BUT I DO APPLY THEM)
1. Get a financial dictionary to help you understand while you are reading (not for this web site, but when you read magazines and books about investing) and getting educated.
2. A plan is better than no plan at all. So whether you pay high commissions, buy load funds, low load funds, no load funds with or without 12b-1 fees, or use a company or bank sponsored dividend reinvestment plan/direct purchase plan you probably have a plan.
3. Consider joining an investment club that follows the National Association of Investor Corporation (NAIC) (www.better-investing.org) principles. I did, and it did wonders to help me to understand investing.
4. Company or bank sponsored dividend reinvestment plans (DRP) and direct purchase plans (DPP) (there are numerous other names for the same thing) are great, but since so many are charging fees now. It’s probably better to research all of the flat fee discount brokers that offer free dividend reinvestment, and find out the pluses and minuses. Let’s face some charge a minimum to reinvest dividends and also for purchases and sales that it probably better to go with a flat fee discount broker that charges $12 or less per trade and nothing to reinvest dividends. You would have more control over when you purchased and sold the shares.
5. Any returns you get from investing will be 20/20 hindsight. If we all knew the future we would all be rich.
6. If you can’t sleep at night with a stock you own (NOT LIKE THAT or not because it going up, but because you are worried about losing money) then don’t buy it, or if you own it consider getting rid of it.
7. Ignore some asset allocation rules based upon your age and years until retirement to determine what percentage of you portfolio should be in cash, stocks or bonds. Invest at a level where you feel comfortable. Remember the if you can’t sleep rule for fear of losing your invested dollars then maybe you allocations may be to high.
8. When looking at historical investment data dealing with price of a particular security, recommendation of a newsletter, etc., remember rarely ever has a company actually sold for pennies. Remember that 20/20 hindsight, this was what your average price paid would have been had you bought at that time.
9. A friend once told me the best way to make money was to buy something the day after he bought it, because it was sure to take a dip. I think that applies to me also.
10. Become a CNBC junkie. Not a requirement to invest, but I like to know what’s going on through out the day and they are my favorite market show.
11. Have fun, but remember everything that goes down doesn’t always come back up. I think we all have experienced that a one time or another.