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For beginning investors, the stock market can be intimidating. Here are one man’s top three tips on investing in the stock market.
If you watch too many Hollywood flicks like Wolf of Wall Street, you probably feel a bit put off by the whole stock market situation. While much of what you see in the movies is true, you can start at the low end of investing without losing too much sleep – or money, for that matter.
The jargon associated with stocks – IPO, hedges, shorts, etc. – make the idea of investing in the stock market look out-of-reach. Not only does it make investing sound risky, but it seems to tell you that the only risk-free way to invest in stocks is to use a broker. But this is far from the truth. The truth is that investing is simpler than it looks.
In fact, you can earn a decent income if you learn to trade and invest intelligently. So how should you get started?Click To Tweet
1. Stock Simulator
A stock simulator gives you practice in real-time investing; you have a virtual amount of money that you can “invest” in different stocks whose prices change with the real-time market. This will help you understand all that jargon without having you read a lengthy, boring article or book.
So where can you find a stock simulator? There are several out there online and in apps, but the best one is by Investopedia.
2. Your First Real Investment is Your First Real Lesson
Once you feel a bit more confident about your investing prowess, you can make your first investment. Just be realistic. Don’t expect to earn a ton of money from the get-go.
Investing requires a lot of patience and self-control. You can only learn these skills through practice.Click To Tweet
And the best way to practice without causing much harm? Buy a small number of stocks in one company. You’ll learn how to avoid being too greedy and selling your stocks when the price is high, as well as how to be patient when your stock prices drop. This lesson will help you when you find yourself investing for long-term returns.
When you first invest, you should research the companies that you might want to invest in. You should keep a tab on each company’s profitability, management, position in market, and more. At first, it may seem a bit boring, but researching and absorbing this information will help you understand why a company’s stock rises and falls. This, in turn, will allow you to make better decisions in the future.
Slowly and steadily, you can diversify your investment by buying into different stocks and waiting patiently for those hefty returns. Good luck!