Four Principles for Investing

Here are four guiding investment principles, adapted from the National Assn. of Investment Corp.:

Invest a set sum in common stocks monthly, regardless of market conditions. Sometimes called “dollar cost averaging,” regular, consistent investing helps obtain lower average costs.

Reinvest dividends and capital gains. This applies the concept of compounded growth to common stocks, leading to a faster increase in the value of an investment portfolio.

Buy good quality growth stocks. Corporations whose sales are rising at a rate faster than industry in general should be stronger companies down the road.

Diversify. Investment in different fields spreads both risk and opportunity. No investor should have all his or her eggs in one basket.