Golden Rule 1: Don't attempt to time the market.

Timing the market is not a matter of guesswork. For a small investor, it is just like taking a walk without having any particular destination in mind.

Most investors realize their mistake only after they have traveled some distance and lost their way. However, as an exception to this rule, the “bottom-fishing” approach helps you to buy stocks at prices below the prevailing levels. This requires your patience and time for buying during a downturn before everyone else does (the age-old philosophy of buying low, selling high). The problem of this approach is that the stock you want to buy may never see the downside you expect.

Golden Rule 2: Don't ever try to predict the market.

Market psychology may be understood best only by psychiatrists, and not for ordinary people like us. What captures the imagination of the market is only temporary. That is, what appears to be a good investment now, may turn out to be bad tomorrow. Most of us recognize this only after it has become clear to almost everyone else, and by then it would be too late to act upon. To give you an example, if the IT sector appears to be the current rage, you may be too late already to cash in on the trend. In this scenario, one should only invest in IT as part of a long-term balanced approach.

Golden Rule 3: Go for the long term investing.

Almost every market guru and investment studies tell us, that investing in the stock should be part of a long-term strategy, for a minimum of five to ten years or twenty years. Longer the period the better. It should be kept in mind, that every year may not yield a positive return on your investment. However, over a while, the positive will likely overtake the negative by a substantial margin.

Golden Rule 4: Invest in blue chips stocks and those with the potential to be blue chips.

Invest only in established companies having a good track record. Invest in stock of companies that are considered blue chips. Others are slowly stepping into this big league. It has to be borne in mind that every blue-chip will not rise after you buy it and that even these stocks have their good and bad months or years. But over time, these fluctuations will average out, and you would be left with a considerable net profit. Also, invest in those companies that have a good track record of declaring dividends, especially those rare ones that increase their dividend payout every year.

Golden Rule 5: Diversify.

Diversify your portfolio, both within your selected sectors and also within the industry. To give an example, one should not invest in the technology sector alone, because it happens to be in vogue, and should consider the other sectors as well.

Golden Rule 6: Prefer steady installment like buying of stock, to buying at one go.

Investing should never be an emergency decision. Investing in shares you prefer can be best accomplished at a systematic pace over time. This will avoid the ups and downs of the market. This is termed as rupee cost averaging, and is one of the safest approaches while investing. You buy, regardless of whether the price is up or down until you reach the desired number of shares of that stock.

Golden Rule 7: Don't invest with borrowed money and always keep a cash reserve.

Don't use borrowed money to buy stocks. Never invest money you don't have. A simple rule is to not leverage yourself to the extent that when the tide turns against you, you. You never know when a financial emergency might arise. You must keep a comfortable cash reserve in your bank account so that it doesn't affect your long-term investments.

Golden Rule 8: Set financial goals that are realistic.

Have a clear idea about what you need the money for: Whether it is to retire early, or finance your children"s education or to fund your daughter's marriage, or maybe it is just to accumulate wealth? Whatever your goal, let it be reasonable and something you can achieve. Huge expectations can only lead to disappointment. Aim for a return that is realistic and not overambitious.

Golden Rule 9: Don't allow your emotions to take control.

Don't allow your emotions to take control of you when you while taking investment decisions.

Golden Rule 10: There are more rules.

If you thought that these are the only rules, then you are wrong. Here are some more.

Ensure that the size of your portfolio size is manageable (maybe 15 stocks are ideal).

Ensure that your stocks are well researched.

Ensure that the management quality is above board.

Check whether the company has a positive cash flow.

Check whether the company can compete on a global scale.

Find out whether the company is shareholder-friendly.

Remember that you won't see success overnight. Investment success takes time, not timing. Remain focused on long-term returns, and don't overreact to short-term market swings. Follow the Ten Golden rules and time will be on your side.