What Advice Would You Give Yourself As a First Time Investor?

I got a question a while back from a young aspiring dividend investor on my Swedish blog. The question was about what stock I though would be a good first building block in his future portfolio. The question got me thinking about what advice I would have appreciated when I just had begun investing back in 2006.

Travel Back In Time

I will, for a moment, pretend that I have access to a time machine with which I can go back in time. If time travel was possible, what would my present self say to the novice I was back then? The dialogue I in such a hypothetical senario could go something like this;

Be patient - you (past me) have time on your side so do not stress. It rarely pays of to be in a hurry when it comes to investing. Investing should be boring and not very exciting or else you are taking on to much risk. 

Define clear goals of what you want to accomplish by investing in stocks. Formulate them in accordance with the SMART Criteria. A smart goal should be:

S = specific
M = Measurable
A = Accepted
R = Realistic
T = Timely

When you have your goals set, start reading as much as you can about stock investment in general and stock analysis in particular. Read, read and then read some more. 

Start your own investment blog and make an effort to analyze companies on your own. There is nothing that's as useful as forcing one's self to articulate thoughts and actions connected to the investment process. Writing a blog will also make you more inclined to stick to your strategy and achieving your goals.

Do not try to predict market movements - it most likely will lead to increased brokerage cost and low returns. Be systematic in your approach and invest for the long-term. Spread out your share purchases (once a month).

Avoid IPOs were management promises shareholders riches and glory - If it seems to good to be true i often is.

Don't invest in obscure companies with a brief history. A better option, when the market feels expensive and there isn't any clear candidates, is to put aside money in a money market fund or savings account with a decent interest rate until prices fall. 

Because prices will fall, even if it does not feel so right now. Although no one can't predict when that will happen a bear market always is succeeded by a bull market.

Do not put all your eggs in one basket, instead invest in stable companies in different industries and markets in order to lower risk.

Opt for stable companies with stable dividend history. To find stable dividend candidates it might be a good idea to start from reputable bloggers watch lists or stock screeners such Google finance or Morningstar. Seeking Alpha is another great source if you're looking for safe dividend plays.

That's the advice can give you at the moment past self. Good luck and take advantage of all the time you have on your side and save for the long-term.

What advice would you give your past self if you had my time machine?