When you need to break the 7 cardinal rules of investing

Many sites offer various investing advices, but what many investors do not understand are the seven well known investing rules that sometimes need to be broken for you to make the maximum return on your investment, which at times can mean making a quick buck.

Rule #1. The investing rule that says buy low and sell high should not be followed all the time. Just because a stock or other investment is low right now there is no guarantee that it is going to go any higher. At times, it may be better to buy high if the investment is poised to go even higher, and remain stable and profitable over time. Just because an investment has gone up in price does not mean that it is no longer a big investment.

Rule #2. Penny stocks should be avoided. This rule is frequently broken by investors, who benefit from breaking it. Many penny stocks are not a good investment because there is no history to research, or at least not over an extended period. That means there is a higher risk involved. But once in a while these stocks can pay off very handsomely. Try to minimize your risks, but if you invest in the right penny stocks and break investing rules it can pay off.

Rule #3. Minimize risks. Most of the time you want to minimize your investing risks. Some traders do this with a stock market price chart and a lot of analysis for short term trading, while others do this with a well diversified portfolio for long term investing. Once in a while an investment may have a somewhat higher risk than you wish, but it is still a good investment, and you may want to break investing rules and go for it. If the investment is solid, you could see larger returns.

Rule #4. Do not pay high prices simply because the investment appears to have high profits. The investing rule and advice is to only pay for profits, but this can be misleading. The figures a company uses for accounting can be fudged and manipulated, so that an investment which has high profits on paper may not be such a good investment in reality. Instead pay for results and proven growth, and your investments will be a better bet.

Rule #5. Do not invest when the market is down. This investing rule needs to be broken. What better time is there to buy than when prices are their lowest, if you are investing for the long term. Long term investing means not looking for a quick buck, but instead building the worth of your investment portfolio many times over during and extended period.

Rule #6. Only invest in traditional companies with proven track records. If this investing rule was never broken biotechnology companies would not be around today. New technologies and applications mean new industries and companies to invest in, all of which may be new and not have a long track record. These investments can pay very well if you get in on the ground floor, before the investment takes off. You can only do this by breaking this investment rule.

Rule #7. Invest only for the possible returns. This investing rule should be broken. The returns are one aspect of your investment, but there may be other factors involved. Some investors are investing in green technology to help improve the environment, while others are investing in other sectors and industries that they strongly believe in. This can end up being a bonus if there is a large market for the industry, sector, or investment. An investment should always be researched to ensure that it is solid, but there may be other factors to consider as well.

The information supplied in this article is not to be considered as medical advice and is for educational purposes only.