9 Investing Rules To Live By When You Self-Manage Investments

If you have a general interest in building wealth and living comfortably in retirement, then investing your money will be an essential part of your life. 

Yet, if you are not working in the financial industry —  the idea of investing on your own can be intimidating. I know at first, my eyes would glaze over when others started talking about the stock market. 

But over the years of being self-taught and learning on my own, I’ve found it’s not as scary as you think when you follow some basic investing rules. 

Many experts like Warren Buffett, have some “golden rules of investing,” which are certainly important.

But I’ve also put my own spin on these classic investing rules based on my own experiences, which I hope can maybe be helpful to you in your own journey. 

Let’s dive in! 

Self-Managing Investments 

I’ve always been the type of person that likes to understand how things work, the techniques involved, and how I can do something myself. And that is the approach I took with personal finances and investing. 

By no means did my knowledge and comfort with money happen over night. But by dedicating time each week to learning and reading these personal finance books and investing books — I quickly found my knowledge growing. 

It’s important to note there is nothing wrong with working with a professional to help you, just ensure you ask a financial advisor these important questions first before handing over your portfolio. 

During my first initial years of learning how to invest wisely, I certainly made a few mistakes. But those mistakes and reading various books and articles helped me set some important investing rules for myself. 

Some of these rules have not only kept my emotions in-check, but saved me thousands of dollars over the years. If you are ready to self-manage your investments or improve results, here are a few rules of investing you should consistently practice.

Investing Rules to Live By

While these investing rules apply to the stock market, these can also be useful as you explore alternative investments too.

You may start to explore real estate investing (like rentals or crowdfunding), maybe fine art like with Masterworks, collectibles, gold, etc. 

There is no specific order to these rules, but I found each to be equally important to my investing growth. 

1. Keep money aside that is not for investing

One of the most important things you can do is to ensure you have an emergency fund set aside. Often, people are eager to invest and put all their money into the markets. 

But then some unexpected major expense happens or a job loss, which requires you to pull money from your investments.

This not only hinders your potential compound interest, but you may be taxed and penalized if pulled from a retirement account before the required age. 

Build your savings up to six months of expenses (or more) and don’t use that for investments.

You can either put that in a high-yield savings account or maybe a CD if you don’t need the cash for 1-3 years. Here are some money saving tips to get you stacking your emergency fund. 

I found doing both was possible, I split what I would save between my Roth IRA and savings account until I had reached six months of expenses saved. From there, I then shifted a bit more of my income to investments. 

2. Always be learning about investing

Even after all these years of investing and reading tons of books, I still have not stopped learning about finances. 

In fact, I still re-read some of the books I bought each year and I still find new nuggets of information I may have overlooked previously! 

But in order to be successful self-managing your own investments and learning about the stock market, you have to be consistently learning.

There are many points of view when it comes to growing wealth and various experienced investors with insights. 

Absorbing all this can help you develop your own perspective and understand the in’s and out’s of investing, plus help shape your own mindset.

Keep listening to podcasts, read some of the top stock investing websites, read books, and even follow blogs like this one! 

3. Don’t invest in anything you don’t understand first

In the early days of my investing career, I was too eager to just start investing and buy something because I had some faint knowledge or heard a tip from someone. 

However, I lost money doing that and ended up realizing later that it was not the right investments for me. 

This can all be avoided by actually researching a bit to what you are investing in.

That means understanding the fundamentals of investing and knowing how to read a prospectus of index funds, ETFs, bonds, or individual stocks. 

Things to look at is how the investment will make you money, whether the investment you are considering has a history of false promises, risk versus reward, and past results. 

Blindly following advice or investing in something because a friend recommended it without researching, 99% of the time will yield disaster for your money. 

4. Learn to remove your emotions from investing

One of the more challenging investing rules to live by is removing emotions from your decisions making.

When it comes to your money, you want to think clearly and with an analytical mind. And when you let emotions dictate your money moves, it’s when some big mistakes are made. 

For example, maybe your family is tied to a specific company or family members have a long history of working somewhere. And without thinking or knowing anything about the financial state of the company, you start investing in their stock. 

You are using your emotions to control this investment, instead of looking at the data that shows if this could be a good company to invest with. 

Additionally, when there is a stock market correction or day of volatility you start to make rash purchase or selling decisions out of fear. The news media will certainly hit you hard with scary headlines, but you must avoid jumping to conclusions! 

Emotional investing can kill your profile and cost you thousands and thousands of dollars. Train yourself to avoid tinkering, stop being glued to the financial market news every hour, or logging into your accounts everyday. 

5. Invest as early as you can with as much as you possible

One of the golden rules of investing I learned early, was the value of investing as much as possible and as soon as possible.

Everyone’s financial situations are different, like cost of living, how much money you make, any debt, etc. But the earlier you can get started investing, the more that time is on your side to put your money to work.

You may have heard the phrase before, “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” 

Compound interest is simply the interest on the principal amount, plus whatever interest has already accrued. And overtime as you invest more and re-invest any dividends, your portfolio starts to grow an accelerated rate.

Plus, when you start earlier there is less investment catch-up you’ll have to do. Meaning if you had two scenarios of investing at 25 and starting at 35, the difference if you let them ride out is hundreds of thousands of dollars.

Additionally, if you started at 35, you’ll have to invest a lot more to catch someone who started at 25. 

While that might seem a bit vague, I go more in-depth about compound interest here if you are interested. 

6. Timing the market is not a good idea

If you do any other research about good investing rules to follow, you’ll probably see on most of those lists about the need to avoid timing the market. 

As an investor, you don’t want to play the game of guessing when the right time to buy or sell is currently. 

Many financial experts and stock news channels will suggest when you should buy or sell, when the market may crash, etc.

Yet, no one can ever accurately predict when or what might happen. After a handful of predictions, certainly one of those may come true — but even then it’s quite rare. 

Your goals should be to stay invested, continue your process, and stay in the market instead of jumping in and out because of what might be happening that day.

It’s pretty darn impossible to know the exact moment to buy or sell, so instead you balance that out by staying consistent with something called dollar-cost averaging

7. Simplicity and diversity are key to steady growth

In almost every good book about investing, there is a common theme around building an investment portfolio that is simple and diverse for growth. 

Typically, simplicity is the more common connection but I also like the diversity aspect for my own investing rules. 

Simplicity has proven over 40+ years to yield better results than those trying to complicate or build unique portfolios. Instead, it’s easy to use Vanguard index funds for example that give you broad exposure and diversify. 

And building your portfolio could be as simple as the three fund portfolio, a target date fund based on your retirement year, or another combo you think fits your style. 

With diversity, you choose to spread your investments out a bit to help reduce the risk of total financial collapse of your portfolio. 

For example, throwing all your money in stocks could spell serious losses during a stock market correction or bear market. But if you had some bonds mixed in, that can help reduce your risk of loss. 

There is plenty more to the idea of diversification, but I’ll leave it to you to do more research if needed. 

8. Don’t get caught up in the stock hype

Typically, I don’t recommend beginners to look into individual stock investing. There is a lot to know, understand, and it’s not worth risking your money.

Now by no means am I against having a small percent of your portfolio into some individual stocks, but you need to be cautious. 

And as you are getting started, it’s easy to fall into the hype of a particular stock. By that I mean, you see the news talking about, financial gurus are telling you to invest — maybe even friends, family, or co-workers are talking about a particular stock. 

Now you are pumped and immediately go invest without doing any research. While one may take off, majority will fail and you’ve fallen into the hype.

Generally, if everyone is talking about it, then you need to be more fearful and stay away. At the minimum, do your research before blindly throwing your dollars at something just because everyone is saying it’s a “golden opportunity.” 

This happened at the height of the Bitcoin frenzy, people were buying at insane highs, which immediately the long-term and early investors started to sell that caused the price to start plummeting down. 

9. Avoid dipping into your investments early

One of my last investing rules is to avoid dipping into your investments early, especially your retirement accounts. This is why the first rule is to ensure you keep money aside and in an emergency fund that is not for retirement of investments. 

Pulling money from your retirement accounts not only affects your compound interest and investment goals, but you’ll face a penalty on top of any taxes you might owe (pending the type of retirement account). 

Certainly there may be some extreme circumstances where you have no choice, but this is where the value of an emergency fund is key. 

Put that cash into a savings account, some in your checking, and you could explore investing some into a CD or maybe a brokerage account after you have 3-6 months saved directly in your bank. 

Here’s what I did and do (although this is by no means exactly what you should do):

  • Figured out my overall savings rate
  • Split that between emergency fund and retirement
  • Once I hit 6+ months of emergency fund, started investing more and maxing out my Roth IRA
  • The money that used to go to my emergency fund, now going into my brokerage account and tax-managed index funds, with the goal to use that money for a house.
Related: Looking to learn more about investing and all the vocabulary? Dive into these common investing terms to increase your knowledge bank.

Tools to Help Your Investments 

In order to help your investments, there are quite a few financial tools and platforms that might be worth exploring.

Naturally, these aren’t all going to magically make you a millionaire, but can help you understand your portfolio, diversify your investments, and help put more money to work!  

Personal Capital – While they offer investment services, you can also sign-up for their free tools. It will help you keep track of your net worth, investment performance, uncover hidden fees, and more. Learn more and sign-up with Personal Capital for free.

Blooom – This robo-advisor also has two tiers to their product: free tools and paid investment services. At the bare minimum you should sign-up and connect your retirement accounts for free. You’ll see how your investments are doing, uncover hidden fees, get recommendations, and more. Learn more and sign-up with Blooom for free

Vanguard – One of my personal favorite investment management companies is Vanguard. Some of the lowest fees around, huge diversity of index funds and ETFs, and more. Great place for your retirement accounts. Learn more and sign-up with Vanguard

Webull – If you are interested in individual stock investing, ETFs, or Options then Webull is a top platform to use. You can even get some free stocks just by signing up and depositing at least $100. Learn more and sign-up with Webull.

Motley Fool – While the Motley Fool might have some aggressive sales and marketing tactics, their stock advisor program is one of the best. You’ll get some of the best stocks picks, detailed analysis, and much more to help you elevate your wealth. Learn more and sign-up with The Motley Fool.

Fundrise – Remember, investing outside of the stock market is a great way to diversify your investments. If you aren’t ready to dabble in rental properties or rehabs, then real estate crowdfunding can be a great option. With as little as $500, you can start investing in real estate. Learn more and sign-up with Fundrise

Masterworks – Besides the traditional avenues of stocks, bonds, and real estate there is another asset class worth checking out: fine art. Now you can invest in shares of well-known pieces of art from artists like Van Gogh, Claude Monet, and more. Learn more and sign-up with Masterworks.  

Vaulted – Many investors also look into investing in gold. There are a few ways to do so, but one way that makes this easier is with Vaulted. You can buy, store, and safely protect your gold. Learn more and sign-up with Vaulted