You are now ready to invest your money in the Stock Exchange. The question is how to invest in stock market for beginners. It is not very difficult to invest in the stock market, but the most important thing is to educate yourself first and then have a plan. Investing successfully will depend on these two factors. Then you will learn about specific products and companies that can yield good results. In this post, we will focus on the basics of the investment process, without too many technical details.
Analyze your situation
Invest in stocks you have risks, it is advisable first to analyze your economic situation. I recommend you have a fund for emergencies, before putting your money at risk. After having this fund to be able to pay the needs monthly (for 3-6 months) you can invest a little money. Another recommendation before investing is to fix your credit. Be clear that it is not necessary to have good credit to invest, but it is advisable to have your credit clean. A good credit rating will help you on the road to prosperity because borrowing can be part of an investment plan (real estate).
Ways to learn how to invest in stock market for beginners
1. First, you must invest in yourself
Increasing your knowledge of the stock market makes it easier to make new and wise investments. The investor successfully invests first in knowing the factors that move the shares and the market in general. Read books about investments, listen to financial news, listen to stock market podcasts, follow some of the actions that interest you, follow some of the mutual funds etc.
Examples of magazines to learn basic concepts include; Money Magazine, Fortune, Barron’s and Consumers Report. Examples of books include; Think and Grow Rich, Rich Dad, Poor Dad, The Intelligent Investor, The Essays of Warren Buffet. Some of these books and review have been published in other languages.
2. Learn how to invest with little money and determine how much you can lose
There are many programs for small investors to know how to invest in stock market for beginners with very little capital. These include the DRIPS and programs of companies such as Disney, Walmart, Coca Cola etc. You study the actions before investing. These programs are good for starting an investment without much risk. Always when investing in the stock market you must determine how much you can lose or put at risk. You can both double your money and you can lose it.
As you can see below, an Apple stock has grown significantly since 2013. For example, if you had invested in Apple 5 years ago, now have more than double your original capital. But in the same way, I could have lost part or all of your capital. This is why you should study the stocks and invest in solid companies.
3. Open an account with a broker to learn
Today there is a lot of competition among brokers, allowing investors a low cost per transaction. With little capital, you can open this account and use the learning tools offered by the broker.
- TD Ameritrade
- Charles Schwab
4. Shares or mutual funds (common funds)
Choose an action to investigate, follow and then buy. After opening and making a deposit in your stock exchange account, you can start buying and selling shares.
Another option is to invest in mutual funds composed of securities shares. With a small investment, you can own fractions of shares in the common fund. For this, you must open an account with a mutual fund company such as Vanguard, T Rowe Price, Fidelity etc. To do your research you can use the company’s tools or those of Morningstar.com.
5. Do your research
Research is the key to success in investments in the stock market. The investigations include; read the analyses of the experts, review the recent news and the company’s financial statements. This information is found on your Broker’s website and on other personal finance pages.
6. Control your emotions
Controlling your emotions is one of the most difficult things when you do not know how to invest in stock market for beginners. However, it is very important to put emotions aside and focus on numbers. This means that you should know how much you can invest and how much you can lose and want to earn in the investment. If you set rules about numbers, your emotions will be more under your control.
7. Check your stock portfolio periodically
Prices do not rise or fall permanently. Then you must find a starting point for each action in your portfolio. Again you must keep your emotions under control.
These are rules or basic ways to invest in the stock market. The stock market is real and solid, but you must do your research before investing. As we mention above how to invest in stock market for beginners, we hope this will help you to take right decisions. If individual stocks are not to your liking, other options include 401k (retirement funds) and mutual funds. These reduce the investment risk.