Where to Start with Investing in Stocks
The goal of investing is to build wealth over a period of time
The goal of investing is to build wealth over a period of time. In other words, it’s making your money work for you while you go about your busy life. However, knowing the HOW of investing in stocks is crucial so that your efforts don’t go down the drain.
Historically, investing in stocks has proven to be the most rewarding for investors, yielding the highest returns and outperforming most other types of financial securities, including the housing market. However, the stock market is dynamic. There have been horror stories of people losing all their investment in stocks and, on the other hand, many investors have become wealthy from stocks investment.
Understandably, the negative stories scare people from the stock market. So, if you are afraid, you’re not alone. It is imperative you know that timing is everything when investing in stocks. Yielding great returns or losing usually depends on the time frame of your investment, your broker’s expertise and your risk tolerance.
According to Benjamin Franklin, “An investment in knowledge pays the best interest.” Hence, before you invest in stocks, know the nitty-gritty. At the least, understand the basics.
The following highlights will move you forward in your journey to get started with investing in stocks.
What kind of investor am I?
This is a fundamental question that you need to ask yourself before investing in any stock. This is for you to know the category of investors you belong to. Are you an active investor who would like to monitor your money’s growth or are you the passive type that buys and forgets it with someone to manage it?
Have a stock basket
A legendary investor Warren Buffett said: “I don’t look to jump over seven-foot bars; I look around for one-foot bars that I can step over”. Before investing in any business, the first thing you do is run a background check on the companies portfolios and select the ones that share the same characteristics.
Choose an investing account
After proffering the answer to the first step, you will need to open an account. If you want to be an active investor, you need a brokerage account. If you belong to the passive type, a Robo-advisor is an advisable option. Both accounts, however, allow you to start with little capital.
How much do you want to invest?
This is where you need to decide the amount you wish to invest. Mind you, don’t invest your emergency money as the stock market is a long-run trade where prices are unstable.
Manage your portfolio
This is the stage where you start buying stocks, ETFs, or index funds from your account using the relevant codes. This way, your money is working for you.
This is obviously not an exhaustive list of stock investing. Do more research and seek advice from verified stockbrokers before you begin your journey.
If you’re new to investing, bear in mind that no matter how much valuable information or counsel you get, there are no 100% guarantees in this game. Heck, the life we have isn’t even guaranteed. If you can come to terms with this, you’re good to go.
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