If you're a nervous investor, take heart. By following these six time-proven principles, you can stop worrying and start winning in the stock market.

No. 1- Systematic investing can improve your results dramatically. There are two reasons for this: First, you develop the discipline to stay in the market for the long term rather than making the mistake of pulling out when it's heading south, thereby missing out on gains when it comes back. Second, dollar cost averaging - which means to invest a fixed dollar amount at regular intervals - helps ensure that you buy low. The reason: If you are investing regular amounts of money, that money is going to go further and buy more shares when prices are down, and fewer shares when prices are higher. In other words, you buy more for less - something any savvy shopper can appreciate.

You don't have to be a millionaire to invest in the stock market regularly. You just need to be committee. "You can start with a modest amount and add modest amounts," says Kenneth S. Janke, president and CEO of the National Association of Investment Clubs in Washington D.C. Some 1,200 companies have so-called dividend reinvestment plans, known as DRIPs, which let you open an account by purchasing as little as one share of stock. Your dividends are then automatically reinvested; plus, you can add new money on a regular basis - typically around $100 a month. To find out about such plans, check out www.moneypaper.com, a site run by Moneypaper Inc., a Mamaroneck, New York, company that tracks DRIPs. Or go to individual companies' Web sites for information. If you prefer mutual funds, you can invest as little as $25 a month through an automatic investment plan. These plans transfer money from your bank account to a fund of your choice at regular intervals.

No. 2 - How you diversify is the most important determinant of your investment return. Everyone tells you not to put all your eggs in one basket. Here's why: If you put all your money into one highflier and that stock starts lagging, you won't have any other investments to offset those losses. Imagine, for example, that you had invested all of your money in Kodak 30 years ago when it was hot. "This stock was the Cisco of the '60s," says John J. Brennan, chairman of Vanguard Group, the mutual fund powerhouse. But once the 1960s were over, it became a big disappointment: Over the past three decades, Kodak has returned an average 6.01 percent a year, compared to 13.28 percent for the S&P 500.

A steady, balanced portfolio performs best over time. Sanford C. Bernstein & Co., an investment research and money management firm in New York City, found that investors who divided their money among three stocks fared better than investors who put their money in the single stock with the highest average annual rate of return. Even if you invest in a seemingly steady, superperforming stock, it's bound to take a drubbing sometime, and in the long run you'd be better off spreading your assets around. To be truly diversified, though, you need to hold at least 25 to 30 stocks, says Jon Bell, a senior portfolio manager with the Chicago Trust Company. But most investors lack the time and money to research and buy a couple of dozen separate issues, and for them, mutual funds are a way to buy into a large portfolio of stocks. The typical equity fund contains 142 holdings.

Of course, a fund does not guarantee diversification. A fund's charter may limit managers to selecting stocks of a particular type, from a particular sector, or even from a particular part of the world. It would take 15 or more of such focused funds to create a diversified portfolio, says Sheldon Jacobs, publisher of the newsletter No-Load Fund Investor, in Irvington, New York. A better strategy is to buy a diversified stock fund. Then if you want to bulk up on certain sectors, add funds that specialize in them.

No. 3 - No money manager can beat the market over the long run. For truly effortless investing and the prospect of better-than-average returns, index funds are hard to beat. As the name implies, an index fund is designed to track the performance of a given stock index. For instance, S&P index funds replicate Standard & Poor's index of 500 large stocks. That means the fund manager isn't actively buying and selling stocks.

The advantage of investing in index funds is that they generally perform better than actively managed funds. Over the past 10 years, the S&P 500 index has beaten 80% of actively managed large-company stock funds, according to Morningstar. For example, the Vanguard 500 Index sported a 17.4% average annual return over the past decade, compared to 15.3 % for the typical actively managed fund containing the kind of large-company stocks found in the S&P 500.

Why is it so tough for the pros to beat the S&P index? In a word: expenses. In a 1998 study, Roger Edelen, an assistant professor at the Wharton School of Business at the University of Pennsylvania, found that trading costs for stock funds eroded fund investors' returns to the tune of about 0.81% a year. Management expenses also erode returns. Overall, large-company funds have average annual expenses of 1.23% a year, compared to just 0.43% for the average index fund, according to Morningstar. Even among index funds, though, fees vary. So take a close look at expenses when selecting your fund.

No. 4 - Over the years, growth stocks are your surest bet. When it comes to picking winning stocks, growth stocks - which have a record of strong earnings growth and prospects of rapid future gains - are easier to spot than promising value stocks. Indeed, it takes a lot more research and investing savvy to tell which value stocks - stocks whose shares are cheap compared to the company's current earnings - are going to take off. Even the pros have had more success picking growth stocks: Actively managed growth mutual funds have beat value funds for at least the past 15 years, with a 16.8% average annual return versus 13.9% for value funds, according to Harold Evensky, an investment adviser in Coral Gables, Florida.

When you think about it, it's pretty simple: Whether through a mutual fund or an individual-stock portfolio, you want to buy companies that are growing consistently and steadily.

Why are earnings so important? In a 1996 study, Louis K. C. Chan, a finance professor at the University of Illinois, found that over a 20-year period, stocks that reported strong earnings gains in the previous six months went on to outpace the overall market by about five percentage points the following year.

No. 5 - A good stock is a bad investment if it's overpriced. One of the best ways to find out if a stock is pricey or cheap is to look at its price-to-earnings ratio (P/E), which is its price divided by its earnings per share. If the stock is trading at a high P/E relative to where it has traded in the past, you may want to wait. There are plenty of places to find information on a stock's P/E. Start by looking at your newspaper's stock listings. Further information about average industry P/Es and historical ratios can be found at www.morningstar.com and www.motleyfool.com, as well as at companies' Web sites and in their annual reports.

Look for companies with P/Es that are less than both the market's average, recently 28, and the average for their industries. Also compare a company's P/E to its historical ratios. Companies don't always have low P/Es because they are bad businesses; sometimes they are just out of favor on Wall Street. To get a sense of whether a company is headed for future growth, look for positive signs such as strong management and brand awareness.

No. 6 - Trying to time the market is futile. The best way to prevent commissions and taxes from eroding your returns is to buy stocks you like - and then hang on to them. In a study of 60,000 investors at a large discount brokerage, Terrance Odean found that those who sold stocks the most earned the least. On average, investors turned over their portfolios at a fast clip of 80% a year. Although they earned 17.7% a year compared to the market's 17.1% annual gain, after expenses they netted just 15.3%. Still worse, the 20% of households that traded the most (with turnover of more than 100% a year) pocketed just 10% a year.

Moreover, it's self-defeating to jump in and out of the market in an effort to catch rises and avoid falls. "Most market returns happen in very short time periods or growth spurts," explains Alan Cohn, a Bala Cynwyd, Pennsylvania, financial planner. "The likelihood that you'll enter and exit at the right time is slim". In fact, if you invested $1 in the S&P 500 and left it there from 1925 to 1999, you'd have $2,846, according to stock market research firm Ibbotson Associates. If you tried to time the market and missed the best 40 months out of 888 months, your return would be just $17.07.

Day traders who constantly jump in and out of the market fair even worse. In a 1999 study, the North American Securities Administration Association found that only one in 10 day traders makes money, and seven out of 10 lose everything.

The lesson: Tune out the daily hubbub. What happens this week or next doesn't really matter. Over the long term, stocks are remarkably steady performers. From 1926 through 1999, they returned an average of 11.4% a year, compared to just 5.1% a year for government bonds.

So, once you've bought a good mix of stocks or mutual funds, you can relax. If you follow the six principles in this article, investing shouldn't feel like a gamble, but a winning path to a secure future.