Have you ever made a New Year’s resolution? Started a diet? Gotten a gym membership? OK, maybe none of the above but we’ve all had times when reality smacked us in the face with, “It’s decision time.” (music plays in the background that has a threatening tone) A voice in your head is telling you it’s time to suck it up and get started.

All well and good but what the heck am I supposed to do and where do I start? I’m referring to investing, which everyone needs to do, but for a variety of reasons they don’t start. I can state without reservation that everyone should be investing because I have yet to meet the person who does not want more money.

A couple issues immediately come to mind when talking to someone who has never invested. The first is always a fear of the unknown and the risk of losing money, followed by a list of lesser concerns. So what does a person do first?

  1. Make a commitment and then make a plan. Without rules or a plan you will fail, no ifs, ands or buts!
  2. Be sure you have emergency money set aside so you will have the peace of mind to stick with your plan.
  3. Learn how to navigate online so you can trade and track your money through your online broker or 401(k), IRA, or individual account.
  4. Next I’ll assume you either have money already in your plan or account.

Before we move into the where-from-here portion, I want to point out some rules that are an absolute necessity. They should be on a sign, in big bold print, right next to your computer so you NEVER forget what constitutes success. And by the way, the rules for success in the markets are those nasty little things that are pretty much universal! So pay attention!

Success demands discipline!
Just like a New Year’s Resolution, a diet, a workout program, and yes, your career; they all require discipline to achieve success.

Control your emotions!
Ever try to win an argument? The harder you push back the more heated it gets? It’s those darned emotions getting in the way! What happens when the emotions take over? Logic gets tossed right over the side which is clearly the wrong time to make a decision. A couple of examples you will encounter when investing where emotions can get expensive:

  1. You invest in “X” and it gets off to a great start. But then the investment goes south. The sell signal is given and an alert is sent. Logic says to sell but your emotions are talking in your other ear. For the sake of the narrative, I assume you decide to ignore the alert. That’s mistake number one.
  2. Next, after you violate the first rule, making a second mistake is easier. You let the investment decline far enough to put you in the red! Now you tell yourself you’ll sell as soon as you get even. The error is compounded and OOPPSS — the discipline is gone and your emotions won that round!

As soon as that happens, it’s harder to get back on track because your wallet took a hit, your ego or self esteem got knocked around and your confidence was taken down a notch. Mistakes are part of investing. The idea is to learn from them, make notes and then move on.

Where From Here?

With rules firmly in place let’s move on. If you have a plan or portfolio already in place, chances are you need to do some housecleaning. First sell all your losing positions so you can start fresh. Next, make sure you are not over diversified; meaning you own too many vehicles (not cars). Always keep the best performers and sell the weak issues. In short, try to keep your money evenly dispersed.

If you are starting with a blank slate, the first item on the agenda is to add some symbols to your list. If you don’t have companies in mind to follow, you could start with making a list of what you are familiar with, use and like. Some examples would be places you shop, restaurants, cars you either own or would like to own, household products you use or online companies. There are endless possibilities but a good rule of thumb is to select companies you are familiar with, because you use their products.

New investors generally prefer to control their exposure to risk, at least until they have gotten some experience and a better command of what’s involved. If this fits your frame of mind, then you have a few choices: mutual funds, ETFs, and/or indices. Why? All are diversified in some fashion. That simply means you are not putting all your money in a single stock. A mutual fund, an ETF and an Index own a number of stocks. An example is an ETF with the symbol SPY. The SPY mirrors the S&P 500 Index. Therefore if you buy one share of the SPY, your money is spread over the entire index of 500 stocks.

BuySelliQ gives investors an edge on the “list” page by always posting three major indices: the Dow Jones Industrial average which has 30 stocks; the S&P 500 Index; and the Nasdaq Composite. The current color is also displayed so at a glance you know if the index is positive or negative.

New or seasoned investors should take advantage of the tools on the site by using the color codes, the charts and the flexibility to control your list. There is no harm in starting slow. Just because you fill the list does not mean you have to buy each one right away. Discipline is your best defense against emotionally driven decisions.

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