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The best stock investment strategy for a beginner focuses on stock funds as the most effective stock investment to keep it simple, and emphasizes investment strategy over stock picking. You do not need to pick the most effective stock or perhaps the best stock funds to do well should you have an investment strategy that keeps you out of trouble. Here's the way to keep it simple and earn money, with less risk.

Funds that invest in stocks will often be called equity funds and they come in two popular varieties: mutual funds and exchange traded funds (ETFs). You may best get started on your own in one of two various methods: by opening a mutual fund account with an important no-load fund company, or by opening a brokerage account with a discount broker. In either case, you can put the top stock investment strategy for novices that I know of to work for you.

Earmark this account as your stock investment account. All your money will be either in stocks (equity funds) or even in cash in the type of a money market fund that is safe and pays interest within the type of dividends. The key to our best investment strategy is the fact that you are never 100% invested in equity funds or stocks, and never 100% invested on the safe side. Instead, you pick your target allocation and stick with it. I will give you an example.

You do not want to be too aggressive, so you pick 50% as your target allocation to stocks. This means that no matter what happens in the market, you will keep half of your money in equity funds and half in the safety of a money market fund earning interest. This is your investment strategy, and it takes the need to make micro decisions out of the picture. You've got a plan and you intend to stick with it to prevent major mistakes and also the major losses that will result from emotional decisions.

Now let's take a look-at how this simple investment strategy works to keep you out of trouble. Bad news hits the market and stocks go into a nose dive. What do you do? Since your equity funds will fall as well, if you fall below your 50% target you move money from your safe money market fund into equity funds. Quite simply, you buy stocks when they are getting cheaper. Then again, if stocks go to extremes on the up side, what do you do?

If your equity funds represent 60% or even find more information of the total, you cut back to 50%. Put simply, you take some money off of the table. How often should you move money back and forth? This best investment strategy is meant to be easy and also not time-consuming. When your asset allocation gets to 60-40 or 40-60, it's definitely time to move money. If you want to be more active, use 55-45 or 45-55 as your guidelines.

This stock investment strategy makes the buy and sell decisions for you so you may relax. Look at the bear market of 2008 in the event the market fell by over 50% by March of 2009. Stocks then went up about 70% over the next 12 months. Did most investors earn money? Quite the contrary. They made poor decisions since they got scared and lacked a sound investment strategy. With this simple plan, you will be doing okay in 2010. Plus, there would be no reason to fear a market reversal, because you have an investment strategy.

It is easy to move money back and forth between mutual funds, but be a bit careful. Don't do it anymore often then is necessary. Second, to keep the tax issue simple do this in an account that is tax deferred or tax qualified... like an IRA or 401k. You may roll your existing IRA into an IRA with a no-load mutual fund company. Then your buy and sell transactions are not reportable for tax purposes.