Investing in stocks is a bet on the future. Anyone who doesn't need their money for a long time and can handle turbulence on the stock markets should invest in stocks.

Markets go up and down. Global events trigger tremors in the stock markets. But markets always climb back up and then know only one direction. It's best to follow an old market adage: invest in stocks and go to sleep.

Anyone who looks at how their stocks are doing every day can end up under extreme inner tension. They get nervous and sell immediately when prices fluctuate, possibly at a loss.

Stocks should be bought when:

  • the money isn't needed
  • it is seen as a long-term investment
  • your nerves don't fray easily
  • a total loss wouldn't bring your world crashing down

Not all stocks are created equal

With solid stocks, meaning solid companies or corporations, you can't go wrong over the long run. Exceptions prove the rule, as with the T-Online stock. The losses were very painful for shareholders. Highly speculative picks should be avoided. You might as well go to a casino.

Such speculative stories can work; they can just as well end in a total loss. Who wants to risk that?

Another old market strategy is this: take your original stake back out and let the profits run. For example, $10,000 was put into stocks. After two years the stock has doubled, and then it makes sense to take the $10,000 stake back out. The $10,000 profit can keep running. A safe and sensible strategy.

Investing in stocks

Set a stop-loss

Investing in stocks also means different strategies. When a stock has done very well, it also makes sense to protect yourself. A good tool is the stop-loss. If the stock falls below a certain value, it is sold automatically. This value shouldn't be set too tight.

For example, a stock was bought at $52.50. It does well, and after 18 months it has risen to $74.80. A stock market crash, whether gradual or all at once, has always happened and will happen in the future too. So protection makes sense. In this case, setting a stop-loss at $60 would be advisable. This level can be changed again and again. If the stock climbs to $99, it would again be advisable to raise your level to, say, $75.

Give the share price room to move, and you can sleep soundly. Not protecting yourself, whatever strategy you use, is not recommended. Investing in stocks should be well thought out and based on plenty of information. Then it's enjoyable, and your next vacation can be paid for with profits!