Investing in stocks can be a smart way to grow your money over time. That’s if you’re able to learn the fundamentals of stock investment instead of jumping in right away. As with any kind of investment, it’s quite an intimidating process especially if you’ve never tried it before. It requires not just sufficient knowledge but also a level of emotional control.
If you’ve got some money set aside and you’ve decided to invest it in stocks, it’s a good start because it means you have a goal and you’re ready to face a little bit of risk, which is part of any investment.
Stock Investment 101
You’ve always heard the term ‘stock market’ but maybe until now, you’re still not certain of its definition. A stock market refers to a designated market where buyers and sellers come together to trade shares of companies publicly listed. Simply speaking, it’s called the stock market because you can either buy or sell stocks.
If you’re wondering how to get started on stock investment, here are some tips to help you out:
1. Research And Learn
Since you’re only a beginner, you’re still trying to educate yourself on how a stock investment works. Your biggest strength as an investor is your knowledge of how the process works. Invest time in researching and learning everything about stocks. Once you’re done, repeat and don’t stop learning.
If you’re the type of person who likes to do all the work and reap the rewards at the end, it’s fine. The stock market has always been welcoming to individual investors. However, make sure you know enough about the risks and how to decide wisely all the time.
For people who don’t want to get into the technicalities of stock investment, you can always consider hiring the best online stock brokers. A full-service broker may cost higher because they’re supposedly the experts in managing your investment. Aside from full management, they’ll also advise you on decisions concerning your portfolio. As such, you can minimize exposing yourself to a higher risk of losing your investment capital.
2. Decide How Much You’re Willing To Invest
Most people think they need thousands of dollars to get started on stock investment. The truth is your starting capital will depend on how cheap or expensive the shares you’re planning to buy.
If you’re hiring a stock broker, ask them first if they require minimum deposit requirements. If they do, it means you can’t open an account unless you meet the amount of deposit they’re requiring. It’s necessary to shop around and ask different firms and brokers. In this way, you’ll know your options and make a decision based on what’s affordable for your budget.
3. Determine Your Investment Goal
At this point, you’ll need to ask yourself and find out if this is supposed to be a long-term investment or not. Short-term goals would mean you’re planning to pull out your investment after around 5-6 years. This is usually the goal of investors who plan on using their money for another financial goal such as paying for their kids’ college education.
However, it’s wiser to set a long-term goal when investing in the stock market. Aside from the opportunity to learn more about the ins and outs of investment, you can potentially grow your money provided you’re equipped with a disciplined approach.
4. Know The Best Stock Market Investments
First-time investors usually go for low-cost mutual funds—a combination of money or investment from a group of investors. The capital is invested into different securities such as money market accounts, bonds, and others. There are money managers responsible for allocating assets in each fund, which is how the investment will generate profit.
Aside from being low-cost, mutual funds are diversified and convenient for investors, especially those with little to no experience in stock investment.
There are also strategic investments you can choose from if you want to be a socially responsible investor. You’ll opt to invest in companies observing ethical practices and procedures. Some companies to consider are manufacturers of green technology products, water purification businesses, and waste management advocates.
All kinds of investments have risks and uncertainties. In stock investment, it’s only a matter of learning how to minimize risks through gaining sufficient knowledge and deciding the best approach to utilize.
Investing in stocks isn’t a walk in the park, but it’s not impossible to conquer and be successful at. What you need to do is understand how the stock market works, decide how much to invest, determine what your investment goals are, and lastly, and know the best and safest way to invest.
Being a seasoned stock investor takes time. But once you get the hang of it, you’ll be rewarded with an income stream that’ll largely benefit your future.