How to Start Investing in the Stock Market: Tips for Beginners
There is always something so appealing about investing in the stock market. Perhaps you feel like it’s time for you to get your feet wet since you have been thinking about this for a very long time. Bear in mind that the one thing you can’t afford to do right now is jump in headfirst if you can’t swim with the big fish. Take the time to understand how all those investors who struck it rich did so. The one thing you know right off the bat is that they didn’t jump in blindly. They took their time to understand what the stock market was all about and that’s just what you are doing now. So, how do you start investing? These tips should get you started in the right direction.
Find a Reputable Broker
While you don’t actually need a broker in the traditional sense of the word, you will need a brokerage at the very least. This is especially important in the beginning because you can often get the advice and tools you need to learn what you need to know before investing. However, there are online brokerages that conduct your buying and selling for you with no ‘real’ person to deal with. There are obviously people behind the scenes, but not a physical person you would be meeting with. They do the trading for you, so it’s vital to find the right broker.
Don’t Aways Discount the Losers
One mistake that many new investors make is to immediately avoid dealing with stocks that are on a downward turn. What you will learn, in time, is that movement is good whether up or down. It’s in knowing what to do with that movement and when to act that matters. For example, tracking losers can open up opportunities when you have learned how to pinpoint that moment in time to snatch up as many of those stocks as possible. If you find that they are just on a temporary series of losses, you might want to understand why. Once you know what market conditions are causing that downward spiral you will know when those key indicators tell you it’s time to buy. This is where the tide will turn, and they will start gaining again. Now you are doing what investing is all about – buy low and sell high. When you feel they’ve reached their bottom, buy, buy, buy.
Be Prepared for the Long Road
Unlike commodities, investing in stocks isn’t day trading. Some of the biggest winners invested decades ago and are still holding onto stocks that are growing in value while paying dividends as they grow. It’s all about knowing when that high point is reached if you want to sell at a profit, and of course you do! However, with stocks that pay dividends, you are wise to hold onto them as they continue to gain in value because you will also be profiting off those dividends.
Although you aren’t expected to hold onto your stocks for decades, you always can if you want to. The point is, investing in the stock market is nowhere near as volatile as being a day trader, so be prepared to wait it out. It could be months, or it could be years. It’s all about knowing when to sell. That’s something that will take knowledge and experience.
Your Key Takeaway
If you can take away nothing else, there are two things to remember. The first would be to find a reputable full service broker or online brokerage and the second would be to have patience. Use the time you are waiting it out to learn everything you can about the stock market. There is money to be made, but don’t jump in blindly. Take the time to learn the ropes and you should do just fine.