Investoguide for teens

Congratulations! You're almost done reading with this guide, which wasn't so short after all (sorry about that, it's just that there are so many things to cover...). As a way to conclude this guide, I have created a concise list of what I find to be the 10 most important rules for someone who is a beginner to investing in the stock market. Some of these rules may have been briefly mentioned throughout the guide, but if they're in this list, they're clearly worth remembering! 

 

My "10 Golden Rules" for investing successfully in the stock market​

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1. Be patient and think long-term. You won't make money from stocks instantly from one day to another (it's not impossible, but it's highly unlikely). Hence, this is why stocks fluctuate up and down, so don't get worried if your stock drops for one day. Therefore, you shouldn't check on your investments every hour, leave them alone! Like Warren Buffett says, "If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes."

2. Don't join the hype just because a stock is being portrayed insanely good. As seen with past stocks, overly hyped stocks are not the best in the long run, and the bad side of them may not be exposed yet. Thus, make sure that you understand the stock's performance and financial health before buying it. Here's a Warren Buffet quote, "We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

3. Don't invest all of your money on hundreds of shares all at once. Instead, use a fraction of your money to invest in the stock market at least once a month.

4. Invest in an industry and company that you understand. As explained earlier in the guide, this is a very important point as it is pointless to invest in a stock that you don't know about just because it is booming. Though you may be lucky, it is a very risky approach that is likely to hinder your portfolio.

5. Buy low, sell high. Although this is a classic investing strategy which you have probably already heard about, it is worth taking a look at and using when buying stocks. Watch the following video to get a better understanding about this strategy: How to Buy Low and Sell High.

6. Only invest money you won't need in a long time. In other words, mostly invest your "leftover" money. This is because you are not guaranteed to make profits from investments, so it is essential that you are smart with your investments and be willing/able to risk losing the money that you invest. However, this shouldn't scare you away: there is always this risk in life, it just depends on how you manage it. The way in which I approached this rule was by investing my saved money in growth stocks and whatever I profited off from that on riskier stocks. This then prevents a loss of money, whilst allowing you to diversify your portfolio. As Benjamin Graham, the "father" of value investing, said, "In the short run, the market is a voting machine, but in the long run, it is a weighing machine."

7. Diversify your investments. Don't just invest in several shares for one or two stocks. Instead, invest in fewer shares for 20 or more stocks. To ensure even more success, invest in many different sectors (such as technology, energy, health care...) and other types of assets (mutual funds, bonds, indexes...). Owning several stocks from different sectors will lower the risk and sustain your earnings. This is because even if one or two of your stocks drop, you will have plenty of other ones that will fill in the gap and make profit for you. 

8. Don't speculate and try to outsmart the market.

9. Carefully monitor your portfolio. Though you shouldn't constantly check on your investments every hour, it is important that you spend some time monitoring your portfolio as many events around the world can alter the behavior of the stock market of a whole or a specific sector from it.

10. Regularly read finance and stock market news. In order to pick a good stock and sustain the success of your portfolio, it is essential that you are aware about any major events that are currently happening in the financial world. 

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Conclusion

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Well, this is where this "short" guide comes to an end.... I hope that all of this has helped you get a better understanding about the stock market and investing. And hopefully, you're now closer to becoming a successful investor. After all, the stock market is clearly a difficult place that has its risks, but in the end of the day, you're here to become a successful investor. Therefore, it is now time for you to continue your journey. In order to facilitate the rest of your research, I have recommended some useful, reliable sources on the Citations page. Good luck!

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