Avoid companies you aren't familiar with. When you are starting out, you don't always have excess money to burn, so sticking with established companies is essential. If you're in your twenties and saving for retirement, look for companies you think will be around in twenty or thirty years. Also stick with investments you understand. If you are thinking of investing in a certain stock and the broker can't adequately explain it to you, skip it. A good broker should be able to explain the investment succinctly and clearly so you'll understand it. If the broker is throwing in big, complex, technical-sounding terms every few seconds, ask him to explain. If he can't, you can put your trust and money somewhere else. Don't ever be afraid or embarrassed about asking questions. The market is extremely complicated and your money is important, so you deserve the information in a clear manner. Your broker should be your partner, not someone who you blindly follow.

Avoid the guy at work who took out a cash advance in order to day trade. He is not going to be a good source of knowledge for you. In the first place, he is trading irresponsibly by using credit. You should always pay off your credit card debt before you begin to invest. You should never use credit to invest. This is a risky and unsound strategy. Secondly, day trading is not for beginners. It is a full time job, and the guy who sits in his office checking on his stocks obsessively is not doing his real job or he's busy with work and can't devote the needed attention to trading. Either way, he is not making the most of his financial situation. Paying a broker to help build a portfolio is a much better idea, especially if you are just starting. Another problem with taking advice from casual acquaintances is you don't really know how they're doing. You don't know if he is overstating his success to make himself look better. And, after all, he is an amateur and can't advice you as well as a professional can.

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Online resources can be great for all kinds of research, but be careful when looking for stock tips. Chat rooms are immensely popular forums for the exchange of ideas, but they can be dangerous for stock tips. One reason is that people on chat rooms could be from companies trying to sell stock. You can't know who is on the chat rooms. Another reason to avoid them goes back to the guy from work with the bad credit and day trading habit. He may very well be in a chat room, giving away advice like he's Warren Buffet. Insider trading can also be a factor. In 2000, a number of chat room users were charged with insider trading after a tip got spread by one man. Another picked it up, and like a high school rumor, it spread like wildfire. When looking for stock tips, turn to reputable business magazines or brokers.

Another thing to beware of is when you get offers that are too good to be true. These hot deals are guaranteed to bring big results with little risk. These deals are not legitimate. With the stock market, it is true that with little risk comes little profit. If you are very conservative and put your money into low yield bonds, you will avoid a lot of market volatility but you won't increase your capital by large amounts. Investments with high risks have the potential for higher gain. You cannot have low risk and high gain. Otherwise, everyone would be putting their money into these safe, money-making ventures. Be cautious of anything that sounds too good.

Investing in the stock market is one of the most important decisions you make in your life. Your future, your children's education, your security in retirement depend on the choices you make. You can find thousands of stock investing tips online for beginners but be careful who you listen to.

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