Investing in stock and shares is no more a game of gambling as it was considered some time ago. Instead it is a game of taking mathematically calculated and correct moves to grow rich beyond one's dreams.

We have the living example of Warren Edmund Buffet before us. Born on August 30, 1930, Warren bought his first stock in 1941 when he was just eleven years old. He purchased 6 shares of Cities Services preferred stock at the cost of $38 per share. The price of the share fell to $27 but climbed back to $40. Almost immediately the price of the share shot up to $200.

In 1943, when he was just 13, he predicted to a family friend that he would become a millionaire by the time he would be thirty, or "[I'll] jump off the tallest building in Omaha," he declared. It hardly needs to be mentioned that he fulfilled his pledge.

One of the wisest sayings of the stock investing gurus is that you should start young if you want to grow rich. Put away some cash for regular investment. Reap the benefits of compounding long enough to make handsome returns. According to Einstein, the power of compounding really is the eighth wonder of the world.

Small, secure but regular investments grow phenomenally in the course of time. You may invest in fractional shares of high value stocks, or invest in Exchange Traded Funds, which can be bought and sold like equities. They attract lower commissions and other over- head charges. They save you in taxes and is a sure way to make profits in the long term. Warren once said," It is not necessary to do extraordinary things to get extraordinary results."

Another option is to reinvest your dividends in shares of the company that pays you dividends. There are some brokerage firms that do not charge any commission in assisting their customers in reinvesting their dividends.

Apart from reinvesting your dividends, you may set apart a small amount of money to be automatically withdrawn from your bank account by your broker every month and invested in the stock of your choice. It is no big deal to spare $ 2, 000 per month if you are making, say, $10,000 per month.

Scheduled investments and dividend reinvestment plans usually work on the principle of compounding. Your profits or earnings are added to your principle and are reinvested. In this way you make dividend upon your dividend. Although at the initial glance, the profits may appear too insignificant, but if you just forget about checking them frequently, you will be surprised at the phenomenal growth of your money over the long term.

The basic philosophy about not checking your accounts frequently is that if you do not see you account, you are likely to almost forget it and may not, therefore, think of withdrawing your earnings. You will thus allow them to multiply and grow on their own.

Warren Buffet made a very practical suggestion about how to make profit in stock investing. He recommended that the investors should do their own research in the stock they intend to invest in, whether it is fundamental or technical research. Research enables the investor to understand the Ins and outs of stock trading. "Never invest in a business you cannot understand," he is reported to have advised the investors.

You should not go by the advice, tips and tricks of the stock market know-alls. You should avoid herd mentality in stock investing. To quote Warren Buffet," You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right."

He echoed the same thoughts while warning the investors against following the crowds. "Be fearful when others are greedy and greedy only when others are fearful," he said.

Yet another sure shot strategy for success in stock trading is to keep your turnover low and minimize frictional expenses. To keep the turnover low means that you should not buy and sell your shares frequently. If you buy and sell frequently you have to pay more commissions to the broker. You have to pay capital gains taxes, management fees and so on. They can cumulatively eat up huge percentage of your total return. According to Warren Buffet, such expenses are frictional expenses and should be avoided as far as possible.

"A lot of great fortunes in the world have been made by owning a single wonderful business.  If you understand the business, you don't need to own very many of them." 

*-- Warren Buffett and the Business of Life

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