The Ten Most Important Points about Share Investing - dummies

The Ten Most Important Points about Share Investing

Part of Investing in Shares For Dummies Cheat Sheet

When you decide to invest in shares, making the right decisions is crucial: The ten most important points you need to know about share investing are listed below.

  1. You’re not buying shares; you’re buying a company.

  2. The only reason you buy a share is because the company is making a profit.

  3. If you buy a share when the company isn’t making a profit, then you’re not investing; you’re speculating.

  4. A share, or shares in general, should never be 100 per cent of your assets.

  5. In some cases, such as a severe bear market, shares aren’t a good investment at all.

  6. A share’s price is dependent on the company, which in turn is dependent on its environment, which includes its customer base, its industry, the general economy, and politics.

  7. Your common sense and logic can be just as important in choosing a good share as the advice of any investment expert.

  8. Always have well-reasoned answers to questions such as ‘Why are you investing in shares?’ and ‘Why are you investing in a particular share?’

  9. If you have no idea about the prospects of a company, and sometimes even if you think you do, always use stop-loss orders.

  10. Even if your philosophy is ‘buy and hold for the long term’, continue to monitor your shares and consider selling them if they’re not appreciating or if general economic conditions have changed.