We all know that stock investing is one of the riskiest forms of investments. Stocks can go up and down depending on several factors. In one of my earlier posts, I discussed several stock trading tips to all my readers investing in the stock market.
It is important to do your homework before engaging yourself in the stock market. Once you’ve done your homework and consulted with a financial planner or broker, it’s time to take the plunge. To make informed decisions, you need to review the list of dos and don’ts.
Here are some of the do’s and don’t that I’ve learned as part of the Rich Dad’s Coaching Program:
What TO DO when buying stocks
- Recognize that you aren’t in control of the management of stock investments. You’re investing in the management of the companies.
- Maintain meticulous records of all transactions. If you work through a discount broker, be sure you’ll get a year-end tax statement.
- Sell when others are buying, buy when others are selling (but only if the company is sound). Better yet—unless you’re a sophisticated stock picker—leave your money in for the long term.
- Be careful when buying “best picks”; they may be one-time performers or overpriced due to popularity.
- Invest in a minimum of five stocks so if one does poorly, the others may buffer the loss.
Rich Dad Tip:
“Avoid transactions through panic; keep your emotions under control.”
What NOT TO DO when buying stocks
- Never invest in a company without reviewing its financial status, prospectus, and SEC reports.
- Don’t give your broker the authority to trade without your approval.
- Don’t be afraid to disagree with a broker’s strategy or stock pick. At the same time, you should think twice before ignoring the advice of a broker who has always steered you right.
- If you’re picking stocks yourself, it’s not a good idea to invest in too many. Remember, you’re the one who has to track them.
- Don’t sell low in a slump only to turn around and buy high. Avoid transactions through panic; keep your emotions under control.
- It’s best not to buy stocks beyond your risk tolerance.
- Unless you have keen investor skills, don’t switch back and forth between stocks trying to catch the next wave.
Source: Robert Kiyosaki’s Coaching Program