When I first learned how to invest money, I decided to follow the strategies of successful money managers. I put together a list of the points on which these professionals agree and have used that criteria to do well in the stock market. My only regret was that I did not buy more than I did.

When you're investing, you should create a checklist to automate your purchasing decisions with proven criteria. That'll keep you from getting swept into "hot tips" that could cost you.

Look at the Balance Sheet for Strong Income

Every company will benefit from having high profits, low debt and lots of cash. You can't go wrong there. Essentially, a "high profit margin" means the company keeps more of what it earns. If one company spends $1 million to make the same $15 widget as a company that spends $4 million to make the same widget, the company that spends $1 million is probably a better deal.

Seek Insider Stock Ownership

When I research a stock, I look for insiders to be invested in the company. I do this for two main reasons. 1) I figure they want to make money and will work hard on the company if they are invested in it. 2) They have the inside knowledge to know if this product/company will do well. I'd say this is an important aspect rather than one of the main reasons to buy into a company. A good balance sheet is more important.

Seek Company Buybacks

If a company is buying back its own shares, then that means fewer stocks in circulation and a higher earnings per share if the company's earnings remain consistent or increase.

These sound tips should help you get you started on your research. Once you have the tools to research, you'll have the freedom to make your own decisions instead of relying on possibly bad advice.

Before I learned how to invest money, I stumbled around not having any idea what I should be doing. I wanted to know how much to invest, how to buy the stocks, and what to look for in a stock.

Never follow a "hot tip." Too many of those hot tips will cause you to lose money.

One way to research a stock is at the mall. If you visit the mall, take a look around at the stores. What seems to be doing well? Better yet, what is your favorite store? Do they have good customer service?

Recently, I was at a store and noticed they had outstanding customer service. I bought some items that would have been heavy to carry, so the customer service rep offers to hold them at the store for me to pick up later. When a few of the items were not available, she ordered them for me. I thought I'd have to return to the store to pick up the items and was pleasantly surprised to have the items show up -- mailed at no extra charge -- to my home. Now, that's the kind of business I'd research. If they are working to make their customers happy, then the company might be a good place to invest.

Peter Lynch, who ran the Fidelity Magellan fund, looked into buying The Limited when his wife and daughter talked about shopping there. By the way, the Fidelity Magellan Fund returned an average of 29% annually during Lynch's 13 years in charge.

Did Peter Lynch run out and buy the stock right away just because someone liked shopping there? No, he did his research first.

Dollar cost averaging is a way of systematically purchasing investments at predetermined intervals for set amounts. For instance, you might decide to buy $50 per month of a certain investment. Doing so can reduce your risk and lower costs.

What is Dollar Cost Averaging

An investor buys into a position by steadily purchasing small amounts over a longer period of time. By spreading the costs (cost basis) out over several years, you prevent yourself from spending too much at one time.

Let's look at this example to understand it better. The stock we pick sells for the prices below during our first three months of dollar cost averaging:

Month 1: Stock Price is $50 per share
Month 2: Stock Price is $25 per share
Month 3: Stock Price is $75 per share

We have decided to buy $500 worth of stock each month. With our $500, we buy 10 shares during month 1, 20 shares during month 2, and 6.6 shares during month 3.

We spent $1500 over the span of three months and now own 36 shares.

If we'd bought all of the shares during month one, we would only own 30 shares. We would have paid more for each share, too.

If we'd bought all of the shares during month two, we'd own 60 shares. We would have paid the least if we'd been fortunate enough to buy them all during this month.

If we'd bought the shares during month three, we would have paid the most and would only have 20 shares.

Benefits of Dollar Cost Averaging

When you use dollar cost averaging, you take advantage of the price when the market is low while not having to watch the market on a daily basis. As you can see, you can get lucky if you watch the market on a regular basis. If you did, you may have jumped on it during month two and received the best deal.

However, a lot of us don't want to watch the market on a daily basis. Maybe we don't have the time. That's where dollar cost averaging comes into play and can benefit us the most. You can automate these plans with your broker and set them up to withdraw money weekly, monthly or quarterly.