3 Tips for Beginners Investing in Stocks
In an economy where many people find it difficult to simply save money and pay their bills on time, some find the idea of investing in stocks to be well outside of their reach. Investing, however, is an essential aspect of learning how to save and build wealth, and avoiding investing as a whole will do you no favors in regards to your personal finances. Rather, you should consider dipping your toes into the pool, as the stock market isn’t as scary a place as many people think.
While there’s no need to fear investing in stocks, there are a few key things that you need to keep in mind in order to ensure that you don’t end up losing money. Remember that the stock market can be volatile, and no one gets a break just because they’re new to the game. If you learn the basics before jumping in, however, you won’t have to worry about losing your shirt.
1. Take a “Long-Term” Approach
One of the most common misconceptions held by those who are new to investing stocks is that they can use the market as their very own “get rich quick” scheme. While there are certainly scenarios in which people play short-term, volatile stocks and are able to grab gains from them, this requires knowledge of advanced investment tactics that most beginners simply don’t have on their side. Instead, you should always take a long-term approach to the stock market, choosing those which are stable and have seen recent growth. It’s certainly not as exciting as the alternative, but patience is a virtue when it comes to the market.
2. Stay Away from “Penny Stocks”
It’s a common misconception that your chances of suffering a loss will be reduced by purchasing cheap stocks, but don’t let this fallacy cause you to make rash decisions. “Penny stocks,” as they’re often referred to, come along with the same amount of risk and gain as stocks that cost 10x more per share, and are thus no safer than the alternatives. In fact, many people buy multiple shares of cheap stocks, yet only one or two shares of more expensive options. If you end up spending the same amount of money on each, however, your chances of risk vs. success will be exactly the same. Penny stocks often lure inexperienced investors into making poor decisions, which can be discouraging for those who are new to the market.
3. Buy Low Whenever Possible
Many newbies look at “buying low” as being the same as buying cheap stocks, but the two principles are entirely different from one another. Buying low refers to picking up a stock when it has reached a low point in its curve. It could seem as if purchasing the stock would be a waste of money (after all, why would you buy a tanking stock?), but the fact is that these stocks are likely to end up back on the rise after they’ve hit a solid low. The term “buy low, sell high” is omnipresent in the market, and stock trading software such as 1Wealth Trading can help you to find stocks that you can turn a profit on if you’re patient enough.
Stock trading can be frustrating when you’re first getting off the ground, but learning the ins and outs of the market will help you to succeed and reach your investment goals even if you’ve never traded before.
Leave a Reply