(2) Never Invest In Company You Don’t Understand
It is one of the highly ignored rules for investing money in equities. Smart investors are those investors which prefer to invest only in those companies or sectors in which they are familiar & understand.
You should be able to understand the strength & weakness of stocks & prevailing competition in the industry. You should also be able to compare the performance of stocks over its peers, etc.
If you don’t understand the business concept of a company then you can’t make money from your equity investments.
(3) Investing & Trading Are Not Similar
It is one of the significant rules for investing money in stock markets. Share trading is meant for short term & share investment is meant for long term. If you can’t differentiate between the two options then perhaps you are about to lose money.
You should first decide your ultimate goal for investment in equities. However, you should not forget to analyze what works for you & what doesn’t work at all.
You should be ready to learn from your previous mistakes. You should go for equity trading in some portion of your equities and keep remaining portion for long term investment in equities.
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