Money Monday: How to Invest in Stocks without Losing Money

First a story. When I was a sophomore in high school, our Geometry teacher asked if anyone wanted to participate in his stock-picking exercise. We were to pick a stock and track its performance over the course of the semester. Guess who lost big time? Me! I was the laughing stock of class. I was so embarrassed because I picked…wait for it…Genentech which ironically would have made me rich if I’d been playing with real money and had held onto it! Because truly it was a rose bud of a stock waiting to blossom, but the stock happened to fall over the course of a semester.

Fast forward in time, the first thing I did when I got my first full-time paycheck was buy Cisco stock. I also ended up interning for Cisco in business school, so life certainly comes around full circle. I also remember buying Yahoo and Excite. Any business that I thought had promise, I bought. Over the years, I’ve lost a lot of money and I’ve also made a lot of money too.

Anywho, I have advice on buying/selling stocks. If you don’t currently invest in the stock market, I’m going to show you how to dive in and make money (i.e., not lose your hard-earned mullah). You ready?

Here’s how to invest in stocks without losing money:

There’s always going to be risk in whatever stock you pick. Even Warren Buffet makes mistakes, so regardless of all the research you do, you’re going to pick some losers. It’s just like dating. You’ve got to kiss a lot of frogs to finally find your prince.

Also keep in mind, I don’t short stocks. I have a buy and hold philosophy.

So settle on a handful of stocks and JUST DO IT!

Let’s take a few examples.

Yahoo has been in the news lately. The powerful Marissa Mayer’s is at the helm and the trajectory is looking better than ever. Buy.

You can’t live without Starbucks coffee? You buy it on a daily basis and there are always lines whenever you go? Buy.

Do some research and google ‘top stocks to buy now.’ Read some articles, go with your gut, and buy!

Like I said, some of these are going to be losers, but if you don’t take the risk of getting into the market now, you’re never going to reap the rewards. And wouldn’t you rather earn more than the 50 basis points your cash is earning in a savings account?

Set aside a budget for how much you want to invest in stocks, figure out what you want to buy, diversify your portfolio, and then go for it and buy.

Here’s what’s important. In order to not lose money, you have to set an alert to sell if the stock price hits a certain target that you don’t feel comfortable with. You got that? You have to set the alerts! I’m always watching my portfolio so I just sell if the stock is ever down more than 2% from when I bought it. Don’t watch as the stock continues to plummet and then pray that it will suddenly reverse course. It ain’t going to happen. Sell as soon as it hits your uneasiness target. It’s an easy way to prune your portfolio and not lose more than 2%.

What are your investment tips?

Do you have any stocks to recommend?

What stocks have you bought that were big winners or losers?

Also, feel free to follow me on Twitter. I tweet insights several times a day, even more interesting tidbits than what’s on my blog. Just check out my latest tweets and see what you think.


  1. says

    Totally great advice Catherine and back in the day I worked for a brokerage house and do remember them pushing Cisco big time. So, you would be so right about this stock from all I heard from the top brokers at that time. But seriously thank you for sharing and loved the story, too (totally looks like you showed them now!!).

    • Catherine says

      Janine, it’s so fun to hear about your history here through the comments. You need to write about working for the brokerage house. I bet you have great stories!

  2. says

    I had Cisco stock…until LAST week! I actually just sold all my stocks to invest in real estate. Like you, I’ve been up, I’ve been down. It sounds to me, though, that you know a lot more than I do, given those three letters behind your name! We shall see how my husband and I do with our latest financial move (hopefully, I won’t rename it “financial blunder”).

    • Catherine says

      Wow Rachel, you are definitely long-term holder, good for you. That’s so funny, I am going to have to sell all my stocks when we make our next real estate move, which I’ve been itching to do. I truly believe real estate is the road to wealth so you’re well on your way!!!

    • Catherine says

      I have had my eye on MCD for a while, although I do not own it. Lots of the big powerhouse money managers have it in their portfolio. You are a smart cookie! Besides, you cannot go wrong with their filet-o-fish or their apple pies!!!

  3. says

    I always thought that only people with a certain level of income bought stocks. I really d look n’t know anything about them. Is there usually a certain amount of money that you would expect to spend to grt started? I need to be walked through from the very beginning. :)

    • Catherine says

      Carla, you can buy just a few shares of any stock to start off and see how it works. As I mentioned my first stock purchase was Cisco. I probably bought only $100 or so worth of shares, then watched it grow. And anytime I had extra money, I would buy more stock. It doesn’t matter the amount. Buying a single share is a step in the right direction :)

  4. says

    We should pay more attention to this. We let our financial advisors take care of it. I think we’ll probably get more involved with our portfolios again once the kids are out of the house. This is really good advice!

    • Catherine says

      I actually have tried to find a financial advisor, as they are the experts, yet have always been disappointed with anyone I met with :(

  5. says

    I haven’t bought any stocks but I follow the business page.

    I have a 457 and 401k. Nothing much, I had it for 14 years. I don’t put much into it but it has grown.

    Also, I started an annuity a couple of years ago and that has grown some what.

    In a couple of years, I will be able to invest more as my kiddos get out on their own.

    I recently did a retirement checkup the other day with someone and it was weird as I did not think I had much. But the person who did it said that with my defined pension, annuity, 401k and 457 plus the fact that I have Social Security that I am doing ok. In fact, she said that I am doing better than most.

    • Catherine says

      Patrick, sounds like you are doing all the right things! A lot of people don’t have 457s or pensions, so it seems like you definitely are doing better than most :)

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