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Before you start to invest into the stock market or any investment. Is imperative to have set aside 6 to 12 months of monthly income as emergency fund. Also the importance of insurance cannot be overlooked. I assumed you would have a financial planner to help you with this.

Once you got the above in place, you can start your investment. When one want to buy stocks we got to ask what's the investment time horizon. You got to make sure you have enough time to ride out the market volatility, preferably to have a time horizon of 7 to 10 years.

Next thing is to research on the company that you want to invest in. A lot of so call investors are punters, they buy on rumors and when market is high sell on news and when market is down. I would like to mention the world's greatest investor Mr Warren Buffet, I strongly recommend all of us to mirror his investment strategies. Or if you prefer to research on your own, do log onto www.morningstar.com and you will have lots of information that helps you in your decision.

There is no risk in the stock market as long as you have done your homework nd have the time horizon to ride it our then there is really no need to diversify. Word of caution is we need to always check on the fundamentals of the company we invested to ensure it remain the same as when we bought into the company.

Learn more about this author, Andy Lim.
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