Dolan Straight Talk Tip: If you don't have time to research stocks, a mutual fund with a good track record is the sounder alternative. You can also put your money into a combination of stocks and mutual funds. But read the mutual fund prospectus closely before you invest, and afterward read the quarterly statements, to make sure your money is well diversified and not going into stocks that you already own.

For our complete advice on mutual funds, click here now to read our Special Report: How to Successfully Navigate the Mutual Fund Maze. It's yours FREE!

Our 10 Rules of Investing

OK, these aren't exactly the 10 Commandments, but we do believe they're pretty important. If you follow our 10 simple rules of investing, you'll likely be pleased with the results over the long term:

Rule 1: Know thy sleep quotient. There's an easy way to figure out how much risk you can tolerate. Just ask yourself: "Will I be able to sleep at night if I put my money into this investment?" Will your significant other be able to sleep? If there is any tossing and turning over an investment, get out of it immediately.

Rule 2: Join, or start, an investment club. We love the idea of plotting your investment strategies with like-minded friends or colleagues. You can bounce ideas off one another and divide the research duties so that you won't be overwhelmed. It's also the best idea since Pop-Tarts for spouses or partners to join together, as 10 heads are going to be better than two at hatching a portfolio plan and probably more objective.

Rule 3: Keep track of what you own, but take a long-term view. Forget trading day-to-day. Check your stocks on a regular basis, about once a week, but don't be one of those obsessive types who pull out a Blackberry to check stock quotes every half hour. The market moves and you can't stop it. At the same time, "buy and hold" doesn't mean "walk away and forget it!" Holding for the long term is also a losing strategy if you bought a sow's ear. Time will not turn it into a silk purse.

Rule 4: Invest regularly. Set a plan to buy one or two stocks per month, if market conditions are right, and stick to it. Invest in small increments each month rather than lump sums. This way you'll achieve dollar-cost averaging in the prices you pay.

Rule 5: Rely on solid research—not "hot tips." Hot stocks generally get there 15 minutes of fame. (Okay, sometimes 15 weeks, but not much longer!) Our rule of thumb is to avoid whatever stocks are the darlings of Wall Street. Yes, you might get in early enough to make a profit, but don't succumb to greed and assume it's going to keep going up.

Rule 6: Go with stocks in companies that you know. How can you effectively evaluate a company involved in a business that you don't understand? Read and learn, yes; but if it's, say, a company that relies on the technology for the latest synthetic heart and it makes no sense to you because you're not a cardiac specialist, stay away. Be on the lookout for companies with new ideas that make sense to you. New approaches to old ideas are good, too.

Rule 7: Balance risk in your portfolio. If you invest with lots of risk, you might suffer losses you can't afford. But if you invest with no risk, your investments won't grow to provide you with the total return. That's return on investment calculated as both the income from the investment and growth of the invested capital.

Dolan Straight Talk Tip: A successful portfolio is one that spreads the risk over a number of different kinds of investments: stocks for growth; bonds and CDs for income; municipal bonds and Treasuries for tax advantages and safety; money market mutual funds for liquidity.

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