Investing in the Stock Market: Beginners Advice
Believe me when I say, it's easier than you think
Investing is a great way to have your money work for you. After a few long term investments, you can reap the rewards. Whilst you've been sleeping, your money has been hard at work. Investing is a way to create a better, happier life for yourself. The goal is to make your money grow over time. For this to happen, you need to practice being patient whilst also staying calm. The stock market can be highly volatile, be careful; only invest what you can afford to lose.
Even if you can only afford $10 a month, it doesn't matter. This money will compound over time and grow. As they say slow and steady wins the race.
Trust me, investing isn't only for the rich people of the world. In fact, with access to the internet, anyone can start investing today. So why don't you jump into the world of investments?
I have lined up some of my favourite tips for beginner investors. These are little bits of advice to help you decide what to do with your money.
So you've decided that you want to invest some of your hard-earned money. First, you need to make a plan. But before we get to that point, there are a few equations to consider. How long do you want to invest for and how much? What is the end goal? Can you afford to lose this money if the stocks go down? Have you read up on the terminology used?
Listen to the experts
You may have become interested in investing after hearing all the success stories from r/wallstreetbets. I would advise you to be careful; a few hit gold and got lucky. However, many were left worse off. If you've got money to blow and want to take a gamble, then head over to Reddit. If you're going to do this properly, then listen to the experts. Find an investor with whom you can relate and follow their advice and strategies. Even better, broaden your horizons and take little bits from every prominent investor.
How would you feel if you lost your money?
If you think you'd feel terrible after a loss, stick to the safer options like bonds. It's normal for first-time investors to misjudge their tolerance; I did it as well. Start your trading journey with safer stocks. Once you've become accustomed to movement in the market (downs as well as ups), then go for some more risky stocks. Otherwise, you may invest in a volatile stock and panic sell when it drops a few %.
Remember, anything you invest in is risky; you never know what's going to happen tomorrow.
Stick to your guns
If you're like me, you'll obsessively check your stocks when you begin. This is terrible practise as you may see a drop in the market and panic to sell your stocks for a loss. If you believe in a company, set a time to stick to your guns. Years are better than months. Stay strong.
It can be tough to ignore market movements, blog advice, inflation, dividends etc. It's an endless flow of information. Over time you'll learn how to look at the long term trends of the market.
By spreading your investments over various sectors and asset classes, you can potentially stabilise your portfolio. If you invest in one particular market you are at more risk of losing than spreading your eggs across many industries. This way you can reduce the initial panic when you start making a loss in one sector; hopefully, another is flourishing and stabilises your portfolio. This way you can maximise long term returns whilst reducing potential losses.
Stop speculating over high returns; look for fair returns over a longer time.
Warren Buffet said, "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price". It's silly to think that taking more risks will guarantee you more money. Look for a company that is relatively established in a field that you know. Save the speculation for further down the line when you are more willing to take risks.
Slowly feed your investments
By slowly feeding your investments, you remove the potential of losing a larger lump of money. Drip feed your stocks over days or weeks. Investors cal this Pound cost averaging, where you gain an average of the market by evening out the lows and highs. Start early and compound your investments.
Find your investment platform
This may be one of the biggest obstacles when beginning. With so many options, it can make it harder to buy your first stock. Research and read reviews on the websites, see if they align with your goals and aims. Remember, you don't have to stick with this website forever. Most platforms make it easy to transfer your portfolio over to them. When researching, look for market options, transfer and buying/selling fees, membership fees and limits. Look for the platform that fits best with your goals.
Invest and reinvest
Once you've built a solid habit of regularly investing, add fuel to the fire by reinvesting and dividends, you may receive. Many investors know the power of reinvesting as it has shown to increase your returns over a long period of time vastly.
You're now one step closer to stepping into the crazy world of investments. To stay on top of it, you need to review your portfolio, risk tolerance and personal circumstances. Over time you will change and evolve as you become more comfortable with the market. Make a plan and take the plunge today. Apps and websites have made it much easier to begin investing, take the plunge today and change your financial future.
Once you get the ball rolling, you'll wonder why you were ever worried about beginning.
*Please note I am not a financial advisor. Do your due diligence before investing any amount of money. Always trade using a verified stockbroker and never invest more than you are willing to lose*