Beginners’ Tips on Investing in the Stock Market

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Beginners' Tips on Investing in the Stock Market

We all know that investing in the stock market is a great way of creating long term wealth. However, it can be stressful for a beginner who doesn’t have the knowledge of investing. Some get inspired by this and learn How to become an investment banker instead of risking things, which is a good idea, but some people may not want to go that in depth. The good thing however is that it’s now easier to invest in the stock market than it was before .

In the past, we had to invest through stockbrokers who were expensive. We ended up losing money because of the wrong advice. There is enough knowledge on the internet for us now. Here are beginner tips on investing in the stock market.

Investing Money, We Are Willing to Lose

The first rule of investing in the stock market is that we should never invest essential money like rent, food and school fees. This is because there is no guarantee of us getting that money back. The investment might always look good but it might turn out the wrong way.

Also, it’s important to invest money that we know we won’t be withdrawing every time. This is because our accounts will never grow if we do this.

Buying Stocks Is Not as Hard as We Think

Buying stocks in the stock market is easy. Some of us end up being surprised at how easy the process is. Most people like spreading rumors that investing in the stock market is hard. The first step is signing up for a brokerage account on a site like E-Trade or even TradeKing.

The good thing is that we can sync the investing accounts of our choice to our bank accounts and then transfer our money at no costs. However, we should be aware that buying and selling stock is never free.

Discount brokerage accounts like E-Trade don’t buy and sell stocks for us for free. But that doesn’t mean that they are expensive; the prices range from $7 to $10. Once we have the money in our accounts, we can now simply click buy stock and search the company of our choice and then put our order.

Investing on Different Platforms

The essential thing we can do while building a stock market portfolio is to diversify. It’s not good if we choose to invest all our money in one investment platform. For example, it’s good that we invest in around 5 to 10 companies. If one company collapses, it means we will not lose all our money.

We can also invest our money in 70% stocks and 30% in bonds. Another option is to invest some money in a big company and the other money in a small company. If the small company grows, we will enjoy more benefits because we bought the stocks at a cheaper price. There are also other people who choose to invest in mutual funds.

Knowing Our Goals and Timeframe

I have come to learn that we should never invest money with a short-term goal. However, depending on the goals we want to achieve, we can invest either short term or long term. The long-term goals options have a high risk but they also have high returns. For example, someone who is investing for his child’s school fees might invest in bonds. This is a short-term goal. And someone who wants to invest money for long-term retirement goals might invest in stocks that will bring him high income in the future.

We don’t have to be scared of investing in the stock market. The internet has enough resources for us to get started, beginning with this article. The important thing is that we should do our own personal research after getting the necessary information from the internet.