The 10 Basic Principles of Investing

It's very likely that you'll try several investment strategies before you find the one that best suits your goals and investing style, but there are some basic investing principles that hold true for all strategies.

Whether you are reading biographies of the most famous investors of all time such as Warren Buffet, George Soros, or Peter Lynch, or you're reading recent articles by popular investment advisors such as Thurman Smith or Jim Cramer, there are a few key concepts that you will see repeated over and over again. After you read this section, you're sure to start noticing whenever they are mentioned. In fact, they come up so frequently, you'll find it hard to believe how few people adhere to them. Unfortunately, even great strategies can lose money if you don't respect the basic principles of investing. You're at an advantage as a beginner, you haven't formed any bad habits yet so keep coming back to this section until these concepts are ingrained.

1. Start Right Now

The right time to start investing is right now. People tend to be optimistic and happy to buy when the market is going up and pessimistic and likely to avoid investing when the market is going down. This is a mistake, when you have money to invest, put it to work, don't try to wait for the perfect moment or the perfect stock because they may never come.

Remember compound interest? It can't work for you if your money is on the sidelines. Many beginners have a very low risk tolerance and want to avoid losing any money. Paradoxically, they also often expect superior returns. It doesn't work that way, there is no such thing as risk-free investing if you want the average market return of 10% or better. Just remember that as long as you select a good long term strategy and adhere to the basic principles of investing, history has NEVER failed, you WILL make money.