by Michael Volta

Created on: October 25, 2009   Last Updated: June 16, 2010

First thing comes first. Know the company you're buying into. Study their past records and dividend payouts. Companies like Exxon and Wal-Mart, are examples of companies that pay a nice dividend to their shareholders. Once upon a time though, there was a big bank that paid good dividends and was very steady and was believed to be the Hercules of the stock market but turned out to be the Titanic. Does this sound familiar to anybody? Yes, it is National City Bank.

So now you know with every gain comes a risk. Now we get to the second rule. Stay on your toes. If all the market analysts are predicting a big drop and you see it coming too, go with your gut feeling and sell it. Don't do what I did with my very first stock and buy it, wait a month then check and see where it's at. I bought some shares of a shipping company at 8 and checked it a while later and it was at 7 something but it had rose to 9 and dropped back down. Now third, take a gain. Do not get over hyped when you make a big gain. You can't expect to hold it and watch it go up another 10 points because what comes up must come down.

Fourthly, don't let the dividends fool you. The company might say that you'll get 20,000 a year in dividends, but they can say whatever they want. Sometimes people will hold onto a stock that is dropping just to get their dividend paid to them, just to hear the CEO make an announcement that dividends have been reduced due to company budget cuts. But dividends are great if you have shares in a steady company that you know will have the cash to pay you. And now we get to the heated discussion about using an online company to buy stocks yourself or getting the help and experience of as broker.

Many newcomers to the stock market will pay the extra money to get the advice of a broker on their side, but I bought my first stock at USAA online without anyone else's opinion into play. But if you are a little worried about losing money at the beginning or you want help to diversify your portfolio then go ahead and get the broker. But with all things considered, just do what's best for you whether it be online or with a broker, risky or safe, dividend or no dividend, or maybe just not stocks at all. But whatever you decide to do, make the best of it.

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