How to Make Money Investing

Here's a piece from Yahoo on how to make money investing. There are several points here that I agree with/follow and I've boiled them down to a short set of great investment principles including:

• If you stay in the market, getting average or slightly-better-than-average returns year after year and avoiding horrendous losses, you will eventually make some major bucks.
• When investors lose big, it's usually because they are in markets subject to extreme volatility: Commodities, short sales, penny stocks, or high-tech stocks no one has ever heard of. If the investor stays in safe places like big broad index funds and large managed funds invested across a broad spectrum of the market, there can and will be occasional losses. But the catastrophic losses that change a life come from investing in slippery places.
• A few blips -- even large blips -- of misconduct or in macro conditions can be frightening. But the long-term picture for stocks has always been good -- if you take a long-enough perspective. If you let fear keep you out of the market, you are hurting mostly yourself.
• Just invest slowly and methodically in broad indexes and sensible ETFs, and don't be driven to rash actions by the siren song of other people's gains.

Great advice overall. If you can apply these to your investments over a long period of time, you can't help but grow your net worth.

By the way, here's another person recommending index investing. ;-)

Comments

[john crowell]

need to save $10 a day to invest to earn 10% return any tips for a senior citizen?

[FMF]

If you're looking for tips on saving, see the "saving money" category link on the right side of this page. Lots of ideas there.

If you're looking for ways to invest it, see the "investing" link in the same area.

[Kelly Parks]

I think investing in index funds over the long term is for sheep. Why not just buy some GIC's and take all the risk out. These so called experts are saying hold long term ride out the bumps in the market blah blah blah...
give me a break. Get educated, get great investments make better than average returns.

[The Financial Kid]

A GIC is not a great investment and I don't know what you consider to be a 'better than average' return. The general rule I can say even while saving & budgeting but yourself is to, "pay yourself first".

A classic line isn't? So fundamental but it works. Can't spend something you never had.

That said, Index/Mutual funds, over long-term is going to work for you. Lets assume your annual pay GIC yields 4%. Take into consideration tax rates and inflation and you're barely breaking even at the end of the season.

There are other ways to to use your funds to really make gain on your investments.

"It doesn't matter how many times you are right or wrong, but rather how big your winners are."