My Rules of Investing


    I try to live by these rules, but like most we get sidetracked.  Life can throw us unexpected events, and even though we try to prepare, we usually fall short.


Rule 1
Have at least 3 months of bills in savings.
(Some professional money managers are now saying 6 months)


Rule 2

    Always participate in a matching employer plan, like a 401K.  Give the maximum out of your contributions, till your employer stops matching.  As an example if your employer will match "up to" 3%, you also will be throwing in 3%.  This is free money, don't pass it up.  It also will reduce your taxable income.


Rule 3

     This can be the hardest rule to live by.  Have no debt.  Should this be rule number 3?  It should be by priority in life!  But most of us will have a mortgage, etc.  So what are we talking about with "no debt" ?  What I mean here is that one should have no "bad debt"!  What is bad debt you ask?  Its debt that nobody wants.  Student loans, Credit Card payments, etc.  If you have a "reasonable" car payment, than somebody is more than likely to assume that debt in trade for the car, and same with your house.


Rule 4

     Plan for the worst.  Yes, this means life insurance.  If you are single, have at least enough to pay for funeral expenses.  If you are married, consult a professional on how much you should have to cover your debt or loss of income, from you or your spouse.  Remember in this game of life, its not if we will get out alive!  It's just "when" will we get out.


Rule 5

     Invest in a low fee S&P fund.  Have at least $10,000 in the account and still maintain a certain amount going in to it every month, before you invest in the stock market with a trading account.


Rule 6

Invest on your own with an on-line trading account.

This money, is money that you can and probably will loose at times.  This money is also the money you can risk, for larger gains.


     There are many small rules that are inclusive with rule number six.  These are the tough rules, because they demand you to research your stocks. You need to know when to add more shares, and when to get out.  Many web pages here will be devoted to resources for you, and many examples of indicators for good times, and bad!


Disclaimer on Rule 6
If you don't have the time or energy to give an hour a week to your stock for research on the company.  Don't touch rule number 6.  Double down on rule 5, or find a good mutual fund you are happy with.  You may think rule number 3 is the toughest rule, it's not!



Rule 7

Give yourself at least 7% and up to 10% of your take home pay, to go have fun with.  Save for that toy, vacation, or nice dinner out.  With out this, you won't be able to adhere to all the other rules.

Web Design by Kevin Huseman