With the economic downturn brought about by the primary and secondary effects starting to impact stock markets as much as in other sectors of the world economy, you may be wondering if it is a good time to begin investing. There are a few problems with this notion right out of the box, however, for the shrewd investor, there is always opportunity in any economic situation. As a general rule of thumb before we dive in, never forget that even the smallest risks still imply a potential loss. Balancing Risk-Taking with Caution While like gambling, stock brokering is by nature a risky venture with moderate to high potential for loss, the same can be said of most any investment. This article is not meant to discourage or scare you away from investing. Indeed, the aim is to temper your expectations, provide some general tips, and point you in the direction of further resources that can empower you to invest with both confidence and care. The Inherent Risks of Stock Trading As mentioned above, for starters investing in stocks in various publicly-traded companies and organizations is always a risk. This inherent risk is what in a large part distinguishes purchasing and selling stocks from the direct selling of goods and services. With risk always comes the potential for loss, even if the risk is a small one. When you are actively aware of this, it helps to keep you informed about each investment choice. Another inherent risk is of losses accumulating into a runaway effect of debt from consecutive losses. In the worst-case scenarios, inexperienced and even experienced investors can get in way over their heads, betting all of their capital on one or a few investments that go bust. This can be catastrophic even if you have not borrowed some or all of the funds to pay for other things. When lenders and creditors are unable to be paid, all the consequences of debt will loom over you like a foul storm cloud. How to Reconcile Risk with Caution to Maximise Your Investments Doom and gloom aside, while risk should always inspire caution, it should always inspire confidence and determination as well. There are many different things you can do, but let’s knock it down to a few highly general fundamentals. Firstly, don’t invest beyond your current means. By starting small and keeping to a small scale even as you grow, you will ensure a slow but gradual increase in your capital. This gives you more breathing room and more to show for your efforts with patience and diligence. In short, as the old adage goes, don’t bite off more than you can chew. Not more than what you can presently chew at any given time, anyways. Keep in mind however that just because you are investing small doesn’t in itself guarantee growth. There is very much the possibility of playing it too safe. You still need to be making the shrewdest investments in the right places to ensure returns. There are cases where a slightly larger investment than your norm might be more prudent because you are confident that not only will you make a huge profit from selling it, but that you will also be able to sustainably absorb the damage if it turns out to be a bust. Conclusion - Recommendations While there are these general tips, there are also some great sources of direct knowledge you can consult out there. One great source of inspiration and potential strategy is The Essays of Warren Buffet, which is a compendium of Buffet’s own annual report letters which yield some insights into his own professional life. Other great examples for research include The Intelligent Investor by Benjamin Graham and Beating the Street by Peter Lynch.