New to investing? Here are MY golden rules (they may surprise you!)

first_img Michael Baxter | Monday, 17th February, 2020 I often read that before you dip your toe into the perilous investment waters, you should do lots of research, educate yourself, set up a dummy portfolio and gradually lower yourself into the investment pool.I’m not so sure. My tip for someone new to investing is that providing you follow certain rules, it’s best to follow the Nike philosophy: Just do it.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…We’re all different and what works for me won’t necessarily work for you, but I would say, providing you follow my simple rules, you can just dive in. It’s amazing what a compelling read that material you once found to be dull becomes once your money is at stake. Education is of limited use if you’re not really enjoying it. Learning on the job, by contrast, can be enormous fun and as a result you absorb the information better and learn much faster — at least that’s how my brain works.You must follow those rules first, though.1. Drip feedIf you have a lump sum and you’re looking to invest it, drip feed your money into your investment portfolio, investing a bit at a time over several years. If you’re investing a part of your income each month, you’ll be automatically adopting a similar approach anyway.  That way you limit your exposure to short-term market fluctuations. 2. Don’t invest in one company, sector or territoryThe key to reducing the risk from investing is diversification. Even if you’re only committing a small percentage of your money to investing on day one, spread it out. This could mean that you only invest, say, £100 in any one company. I feel the benefit of diversification is worth spending extra on multiple trading fees. Make sure you invest in companies that operate in different sectors and ideally in different regions of the world. Also, and this is especially the case when you’re new to investing, diversify by choosing different types of companies — if you invest in a small company, seemingly with lots of potential, balance this with an investment in a large, stable one.3. Invest in what you knowAt first, only invest in companies that either operate in a sector you know a lot about, maybe from your professional background or invest in companies whose products you’re familiar with.Later on, as your knowledge grows, and after extensive research, you can branch out, investing in areas of which you don’t have first hand experience.4. Take your timeDon’t be in a hurry to sell. The biggest mistake an investor can make is to over-commit and, a few months or years later, find they urgently need the money. If you over-commit, you’re taking the risk that the moment when you need to sell may coincide with a difficult period for the stock market. Instead, only invest what you can afford to on the assumption that you might have to wait for good market conditions before selling.Research with lots of background reading is essential, but this research becomes a lot easier and enjoyable if you’re already investing.Follow those rules and you’re greatly limiting your risk. Under those circumstances I would say learn by doing — invest, watch and learn. Simply click below to discover how you can take advantage of this. Our 6 ‘Best Buys Now’ Shares Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! 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Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. See all posts by Michael Baxter “This Stock Could Be Like Buying Amazon in 1997” I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Enter Your Email Address New to investing? Here are MY golden rules (they may surprise you!)last_img read more