Making Money in Stocks is Largely About Not Losing Money!

If you are like 95 percent of people out there in the world, you probably are quite concerned about how you keep track of your money. I would venture to guess that you don't just throw money away for the heck of it. Let's face it, money is important and though it is far from everything in life, you need money for quite a few things in this life. If you have taken the step and decided to invest your money, you certainly have done so in order to try to make your future better and accumulate extra money. The stock market is a good place to do this, but only if you are disciplined and have a solid understanding of where you are at right now and where you want to go. I'm here to tell you that one of the most important rules in investing in the stock market is make it first priority to not lose your money.

Many of you probably just sighed or read that last sentence with at least a bit of disbelief, but yes that is what I said. Let me qualify that statement now. I understand that when you are investing in the stock market you are going to lose money from time to time, it just can't be avoided. The market is bound to go through a rough patch where you are going to see your portfolio dip. Having said that, I think that an investor who puts extra emphasis on retaining what they already have and then diversifies his or her portfolio to keep things healthy is in a much better place than most.

The greatest investor of them all, Warren Buffett, says that his number one rule of investing is to not lose money. Ironically, his second rule is, "Don't forget rule number one." Clearly, Buffett thinks this is a really big deal! I may be a finance expert to some, but I'm not in any position to argue with the best finance expert of them all! I think the main is onto something.

How do you go about trying not to lose your money in the market? I have five ideas to help you do this. First, do your homework and make sure you diversify your portfolio. Second, invest in several stocks or mutual funds that pay healthy dividends. These dividends will serve as a nice buffer no matter what the stock market is doing at that particular time. Thirdly, hold yourself accountable for your investments. Too many people think of the stock market as a game when this is your hard earned money at work here. If you want to invest in the market, you better be ready and go in with a solid game plan. Fourthly, place stop limits on your trades, so that even if the market tanks you can't lose any more than a given amount. Finally, keep a long-term outlook on your investments and don't just invest in the "flavor of the week" stock.

It's your money, so I suggest you do everything you can to hold onto it, even when you are investing!