The world of investments offers a dangerous draw: huge rewards

with the chance of terrible losses. Investors love the idea of

accumulating wealth, but no one likes losing money. The trick

is to know how to invest with minimal risk. Nobody can predict

the fluctuations of the market completely accurately, but as

you start investing, you’ll learn to take the losses and look

forward to the next market high.

The market is uncontrollable, but it helps to know what you’re

investing in. Become familiar with the products and businesses

you invest in before you make the jump. Too many new investors

invest in a hot stock from the previous year, excited by the

market high. Remember: market highs never last. It’s smart to

invest in a strong stock with a record than a trend that’s in

one year and out the next.

Just as important as the product is the reasoning behind your

choosing it. If you know why you’re investing in a stock,

you’ll always know what your next move is. For example, if you

invest for the sake of profits only, when prices fall you’ll

know to drop out, instead of fretting over whether to wait and

cross your fingers for the next market high, or cut your

losses.

Investments are all about timing - not the timing of the market

highs and lows, but the timing of your moves in relation to

them. You have to know when to take profits and when to cut

losses. Some say when the market is up, run a profit in case

the market keeps climbing. However, others worry the market

will fall, so it’s best to back out while you’re up. When the

market is low, everyone knows to cut your losses - back out

before it gets worse.

Don’t invest in what you can’t afford, and don’t invest without

a good reason. While the market highs are satisfyingly

rewarding, the market lows are part of the ride. Although much

of investing is gut instinct, you can’t afford to make reckless

decisions. Invest to your advantage, rather than let the market

rip at your bank account.

The best thing to do is study the market. Don’t jump to invest

before you study the product’s record and think over your

reasoning. Some good books about investing include The Real

Life Investing Guide by Kenan Pollack and Eric Heighberger, The

Only Investment Guide You’ll Ever Need by Andrew Tobias, and The

Wall Street Journal Guide to Understanding Money and Investing

(3rd Edition) by Kenneth M. Morris and Alan M. Siegel. Know

what you’re doing and why before you start investing.

When you make informed choices, you can gain many benefits from

the market. The business world is unpredictable, but when the

market’s up, the rewards are well worth the gamble.