If investing were extremely easy and simple, everyone would be doing it. That being said, if you’re keen on getting into the stock market the 5 Tips below will give you a starting point so that you don’t jump into it with no knowledge whatsoever. Simply put, the more you know about investing before you start to use your hard-earned money to do it, the better off and more successful you will be. Enjoy.
Stay focused. Many new investors tend to focus on aspects of investing that are either unimportant, irrelevant or a combination of the two. Frankly, this can lead to lots of financial problems and a bunch of stress as well. Better to focus on a few key elements, keep a wide margin of safety and invest for the long term, at least in the beginning. If you do this your chance of successful investing increases exponentially.
Don’t set your expectations too high. If you’re getting into investing because you expect to quickly accumulated a lot of wealth you’re getting into it for the wrong reason. Yes, investing is something that should increase your wealth but, in most cases, unless you are extremely lucky, your investments will not pay off quickly but will need to be attended to, like a fine garden, over many years in order to produce fruit. (And by ‘fruit’ we mean profits.) even though stocks historically have the highest rate of return this still is only around 10% and, if your expectations are more than that, you may wish to consider another way to invest.
Be prepared to invest over a long period of time. The simple fact is that the stock market tends to resemble a child playing with a very bouncy ball; it goes up and down constantly and very erratically. Investing in the short term can be quite maddening because of this fact and, if that’s what you intend to do, be prepared to have your bouncy ball hit you in the face, completely deflate or get lost in the neighbor’s yard. Better to invest in the long run and let your stocks do what stocks do; slowly grow over time.
Frankly, many new investors find themselves chasing stocks that are trending or popular and, when these stocks go south, they get frustrated and confused. Investing, like teaching a child, requires an awful lot of patience.
Don’t listen to everything that you hear. In today’s media obsessed culture there are literally hundreds of outlets spewing forth their ‘knowledge’ about investing every single day. Frankly, what this means is that there are dozens of opinions about what stocks are going to do and dozens of accompanying guesses as to what investors should do with them. In our opinion it’s much better to simply focus on the companies and stocks that you have researched, track their performance as diligently as you can and tune out all of the investing noise that will, in most cases, just confuse the situation.
Investing, just like anything else that’s worth doing, and takes preparation and practice. The only way your investing skills will improve is by doing your due diligence, taking your time and practicing every day.
Act like you own the company. If you own stocks you own a piece of the company that issued them. Knowing this, it makes a lot of sense to research and no every single company whose stock you own. Accessing and reading their financial statements regularly, knowing where they are headed and if they are well run and knowing what type of history that they have had all things that will help you in your decision-making process and also help you to not make investing decisions that end up blowing up in your face.
Although investing is not necessarily a game, if you treat it like one, play often and learn from your mistakes you will usually find that you come out a winner. There will be setbacks and there will be surprises but, if you follow the five tips above and continue to learn and research as you go, your chances of success will be much higher. If you have any questions about investing or need answers that you just can’t seem to find online, let us know and we’ll do our best to help you.