Well, this is the hardest part about stock market investing. Yes, there are occasional losses, which we all try to keep to minimum. However, every stock market investor has to deal with losses at some point. This shouldn’t stop you from investing in the stock market. With losses and all, the stock market remains one of the best places to invest your money. Even the safest investments, like saving accounts, come with risks. Inflation, for example, can seriously undermine your investments, and the stock market is actually one of the best ways to keep your money safe from inflation. Real estate is another example for how risky all type of investments are.

If you invest your money in real estate and the prices in that industry go down, like it’s the case now, your investment is practically blocked in that house. Real estate is a domain where the prices don’t come up on the short term. If in 2007 you invested $150 000 in real estate, by 2009 your investment was probably 50 % down. Well, it will take at least a decade to recover the losses – and even more for making any profits.

The biggest advantage of stock market investing is the fact that you actually put your money in a lot of different places. The stock market offers you access to thousands of companies from around the globe. Yes, from time to time you’ll bet on the wrong company and you’ll lose some money, but you’ll have a chance to recover your money or to compensate the losses with gains from other stocks. So, from that perspective, stock market investing is safe investing.

However, as we stated before, there will be moment when you’ll lose money and it’s very important to know how to act in such moments. The best strategy is to discuss to your stockbroker every move you make and to establish some clear rules about the actions he has to take when the price of your stocks is falling down.

• If the stocks that started to go down are from big, established companies, you can wait a few days before selling. Big companies generally recover losses fast – so, you don’t have to sell the moment when the prices started to go down.
• If you bought some emergent, speculative funds and the trend is not what you expected, meaning they go down instead of going up, you need to move fast and to cut your losses. So, sell as soon as possible.
• Talk to you broker and let him know your limit – how much you afford (from a financial and psychological point of view) to lose.  Explain clearly what you want him to do in certain situations.
• Make sure you check the stock market on daily basis. You can’t just put your money in there and ignore your investment. Making money on the stock market requires time and effort. You need to be familiar with the new trends on the market to be able to make money or, in certain situations, to limit your losses.