When written down on paper, investing in the stock market may seem very easy. However, that is not entirely true. There are many things you need to know when investing before you do. Furthermore, it is easy to lose your money when investing. That is why you must ensure you are being careful with your investments.
There are a couple of questions you need to ask yourself before investing. How much are you willing to invest? What is your investment strategy? What type of stocks do you want to invest in? What are your investment goals? Now, investing sound complicated? Doesn’t it?
For those beginners, the stock market can be complicated. Just the stock market jargon alone can be complicated for you. However, you don’t need to worry about learning it all in one day.
The stock market is a great way to invest in your future. You could be investing or putting down a deposit for a house. You could also do it because you want more money for your retirement fund. It doesn’t matter what your goals are. You need to have a good strategy to achieve those goals.
If you want to invest in the stock market but don’t know where to start, then don’t worry. We have the perfect five steps for first-time investors to help you achieve your investment goals.
Pick The Amount You Want To Invest
You need to decide on how much you are willing to invest. It will be a consistent amount of money each month that you will be able to invest. You need to look at your monthly salary and take into account how much you can afford.
A good way to do this is by following the 50-30-20 rule. It is one of the best ways to start investing. If you are unsure what this rule is. It is where you will split your wage after tax. The first 50% should be money on your bills. 20% of that wage should go into your personal savings/investing account. The rest of your money should be going on things you enjoy, such as eating out, going out with friends, a weekend away, new clothes or anything else you enjoy.
Following the 50-20-20 is one of the best methods for your future. However, this rule might not be possible with most people. The reason is that all of their bills are more than 50%. Everybody’s financial situation vary, so look at your wage after tax and see what is possible.
Create An Investment Account
The next thing you need to do is create an investment account. Ideally, you need an investment account that charges additional fees. These additional fees can add up, meaning you have less money to invest. Furthermore, some accounts will charge you money when you withdraw your investment.
Pick Your Investment Strategy
One of the issues with investing is that there are many different strategies. Additionally, you need to invest in multiple different stocks if you want to be more cautious.
One of the issues many investors make is that they put their money into one stock. Then, they hope it will gradually increase over time. Although they are not entirely wrong, there is a much more efficient way to do this. When you invest in the stock market, you must diversify your portfolio. If you only invest in one stock, the value of it can fluctuate.
Invest As Early As Possible
As soon as you think about investing, you should invest. However, don’t invest in any stock that you think will make you millions. Invest in companies that have been around for years and have been very successful. For example, Apple and Microsoft are both very successful companies where you can expect gradual growth. It doesn’t have to be too much money either.
Many people put themselves off from investing because they don’t have enough money to invest. However, you don’t need a set amount of money that you have to invest. It can be as little as $10.
The reason why people think they have to invest a certain amount is because stock brokers charge service charges and transactional fees. Due to modern technology, that is not the case as we can invest from our phones. All you need to do is create an account with an app like Trading 212, and you are on your way to making your first investment.
All you need to do is start as soon as possible. Once you have done that, you can invest the same amount each month.
Look At Different Investment
There are many different types of investment so make sure you do your research. Stocks, bonds, mutual funds, ETFs and many others are all different types of investments.
A stock is where you will buy shares of a company. There are many different types of stocks where you can invest your money. We advise you to pick an area in which you are interested, such as AI, e-commerce, the car industry etc.
The share price value needs to increase for an investor to make money. Additionally, some stock companies will pay dividends. These are regular earnings when a company is making a profit.
A bond is a much safer investment compared to a stock. It is where you act as a creditor towards a company or government to increase their capital gain. As they are less risky, they also offer less returns. Nevertheless, you can almost guarantee you will get your money back and some extra on top of the initial investment.
Mutual funds are another great way to invest; for those who don’t want to spend hours investing in different stocks, this will be more suitable. Index Funds are a bunch of stocks in one stock. The risk factor depends on those in the index fund as well. However, this would be the best option if you want to have a diversified portfolio.
There are plenty of ways where you can invest your money. As soon as you get the idea that you want to invest, you should do it. The sooner the start, the more you benefit from it. Just make sure you do your research before you invest your money.
There are many illegitimate investments out there, including the stock market. Another thing to mention is that you should invest with an official company. There are many scammers out there who reach out to you. They tend to reach out to people who are financially struggling and desperate for quick cash. Then, shortly after, the victim would lose their money from the internet scam.
About the author
Amy Jones is an experienced author in the business and investing sector and an avid researcher and writer. Having worked with several businesses, Amy is now a freelance writer looking to specialize in the topic.