Many youngsters within the age group of 20 to 30 years are inclined to invest in stocks as an attempt to control their wild spending sprees and become better personal money managers. Perhaps you’re one of them. If so, you may be on the right track as building wealth for the future is wise money management!
Here are a few tips for beginners, but to also help you perform better if you’ve already started investing.
Watch the Stock Market
Keep a constant watch on the stock market for at least three years at a stretch (you can start this early), before you make your first investment. The more effort you put into learning and studying how stock investing works, the better results you will get.
As a beginner, you need to perform thorough research on the company whose stocks you are planning to buy. Your research should mainly focus on the company’s financial history, present standing and the gross rise and fall in its share prices in the last 10 years. If this information is difficult for you to understand, seek help from a broker or financial adviser who works with stock investing on a regular basis.
It’s no secret investing in individual stock is riskier than investing in mutual funds. Unless you’re managing a large portfolio, your investments are nearly as diversified. If you aren’t willing to tolerate a high fluctuation of your stock value then you need to seek lower-risk type investments. In other words, you should invest in stocks of those companies which have a steady financial standing for a longer period of time.
Consider Online Stock Trading to Save on Fees
Search the internet to find cheap online stock trading firms that can help you purchase stocks with lower fees than that of regular brokerage firms. All the mainstream brokers are perfectly fine to use as a basic trading platform. But, you will find that many of them charge exorbitant commission fees to make simple stock trades. So, shop around to get the best rate. On average, $7 to $10 per trade is a decent rate. The commission fee usually is added to your total stock price.
Save to Invest
Develop a habit to set aside some money for investing every month. Try to save up some amount of money every month after paying off your bills. Never mind even if it is a small amount to begin with. Beginners are not expected to invest huge amounts anyway!
Leverage Online Tools Like Google Finance
Before you make any transaction, check out the actual price of the stock. You can get stock related information on Google Finance. All you need to do is visit Google Finance; then go to the text box beside “Get quotes” and type the name of the stock in the box and then click on “Get quotes” to get the price and other information related to the stock. You can also visit your online broker’s website and type in the stock’s ticker symbol on the stock trading page.
Track Your Stock Investments
Keep track of your stocks to stay informed about the daily rise or fall in the price. The best way to track your stocks is to create a Google Doc Stock Portfolio Tracking Tool based on a Google Doc Template, where you can simply use the functions on Google Finance and retrieve the stock values you require. And you can do all of it for free!
Keep yourself updated about financial news and statements. It is a great way to learn about possible future investments. You can visit various financial websites to update yourself. Crypto Cool News is a great resource of information if you want to learn how to invest in cryptocurrencies.
Know When to Sell
Selling stocks usually depends on two main factors: personal reasons and market reasons. You can sell your stocks when you think the market is favorable and when you expect to make a good profit. You can also sell your stocks when you think the risk tolerance level of your investments has been reached. Stocks can also be sold if you are in some urgent need of cash. Overall, this decision is based on the circumstances around the investment and individual investor.
In conclusion, don’t jump into the very first investment option you come across. Do your research carefully before investing and make sure the stocks you’re choosing align well with your objectives and risk tolerance. Following these guidelines will make you a smart and experienced investor over time.
What do you think of these beginner stock investing tips? What additional tips would you include?