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Top 5 Stock Investing Tips For Beginners - First Things First
If you've finally decided to take the plunge and invest in the stock market, but don't know where to start, here are a few guidelines for investing that every beginner should take to heart:
Tip #1. Assess Your Risk Tolerance. Investments won't always work out the way you want them to. Stocks are very risky for investors; particularly those who are novices and do it yourselfers who invest in securities without the guidance of a licensed financial planner. Even seasoned investors with years of experience sometimes get it wrong and lose money. How much money are you willing to risk? Just like gambling, the rule here is to never invest more than you are willing to lose. The stock market takes a back seat to your basic needs. Food, rent, utilities, loans, etc. are ALWAYS paid before you buy stock. Take this advice to heart. There are no “guarantees” in the stock market, you could lose your money!
Tip #2. Select the Right Broker. Brokers buy and sell stocks for you based on your trading instructions. They earn a commission for this service. There are basically two types of brokers: Online Discount Brokers and Full Service Brokers.
Discount brokers are less expensive and are associated with online trading accounts. Full Service brokers provide more personalized service and will actually provide you with investment ideas and advice. The fees of full service brokers are much higher and are mainly utilized by experienced investors with large portfolios. Once again, perform due diligence when deciding on which broker you will trust with your money. Research the brokerage market before selecting a broker. Do your homework and pay close attention to the fees charged for their services. Read the fine print.
Some questions you might ask yourself are:
- How much money will you have to pay the broker to make each trade?
- Will you have to keep a minimum monthly balance in your account?
- Is there a minimum trade amount?
- What kind of investment tools and advice can you expect?
Tip #3. Perform Due Diligence. Never pick a stock before you do your own homework. It doesn’t matter where or from whom you receive “investment advice”, the buck stops with you. Always do some research and technical analysis of the company behind the stock. Yahoo Finance, MSN Money, The Motley Fool, Market Watch, Google Finance, etc. are all good starting points and provide important information about securities. Stock tips from self-proclaimed experts, newsletters, message boards, etc. are not valid indicators of the value of a specific stock. It’s up to you to verify the facts.
Tip #4. Diversify Your Portfolio. Don’t put all of your eggs in one basket. Diversity is key in stock market investments. For this reason it is an excellent idea to have a number of fingers in a number of pies, financially speaking of course, at any given time. One way to help diversify your portfolio is to choose stocks in various sectors rather than focusing on one. Also, if you are putting yourself in a position to rely solely on stocks you need to take a serious look at your overall investment plan and see where changes can be made. Mutual funds provide a little safer bet when it comes to your financial future. Again there are no guarantees but these are much safer bet than securities and will help to diversify your investment portfolio and your retirement plans.
Tip #5. Maintain Emotional Detachment. Basically this suggests you don't fall in love with a stock. It is the capacity to understand and regulate your emotions so you can distinguish between emotions and facts and then use this information as a guide for your thoughts and actions when buying and selling securities. Investors must guard against developing an emotional attachment to the stocks they invest in. Analyze your stock picks with cold, emotionless scrutiny, relying on the facts as they are, not how you want them to be. For example, instead of getting caught up in the insanity of swing trading or short selling, try setting entry and exit points and sticking to your guns. Dangerous emotions such as hope, faith and denial must be avoided at all cost. When it comes to dealing with bad picks, mistakes and losses, the first cut is the cheapest.
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About the author: Golan Michaels is a online stock trader offering investment advice, stock market information and analysis of current market trends at the following website: Stock Market For Beginners
TAGS : Stock Market For Beginners
No comment (Add comment)
If you've finally decided to take the plunge and invest in the stock market, but don't know where to start, here are a few guidelines for investing that every beginner should take to heart:
Tip #1. Assess Your Risk Tolerance. Investments won't always work out the way you want them to. Stocks are very risky for investors; particularly those who are novices and do it yourselfers who invest in securities without the guidance of a licensed financial planner. Even seasoned investors with years of experience sometimes get it wrong and lose money. How much money are you willing to risk? Just like gambling, the rule here is to never invest more than you are willing to lose. The stock market takes a back seat to your basic needs. Food, rent, utilities, loans, etc. are ALWAYS paid before you buy stock. Take this advice to heart. There are no “guarantees” in the stock market, you could lose your money!
Tip #2. Select the Right Broker. Brokers buy and sell stocks for you based on your trading instructions. They earn a commission for this service. There are basically two types of brokers: Online Discount Brokers and Full Service Brokers.
Discount brokers are less expensive and are associated with online trading accounts. Full Service brokers provide more personalized service and will actually provide you with investment ideas and advice. The fees of full service brokers are much higher and are mainly utilized by experienced investors with large portfolios. Once again, perform due diligence when deciding on which broker you will trust with your money. Research the brokerage market before selecting a broker. Do your homework and pay close attention to the fees charged for their services. Read the fine print.
Some questions you might ask yourself are:
- How much money will you have to pay the broker to make each trade?
- Will you have to keep a minimum monthly balance in your account?
- Is there a minimum trade amount?
- What kind of investment tools and advice can you expect?
Tip #3. Perform Due Diligence. Never pick a stock before you do your own homework. It doesn’t matter where or from whom you receive “investment advice”, the buck stops with you. Always do some research and technical analysis of the company behind the stock. Yahoo Finance, MSN Money, The Motley Fool, Market Watch, Google Finance, etc. are all good starting points and provide important information about securities. Stock tips from self-proclaimed experts, newsletters, message boards, etc. are not valid indicators of the value of a specific stock. It’s up to you to verify the facts.
Tip #4. Diversify Your Portfolio. Don’t put all of your eggs in one basket. Diversity is key in stock market investments. For this reason it is an excellent idea to have a number of fingers in a number of pies, financially speaking of course, at any given time. One way to help diversify your portfolio is to choose stocks in various sectors rather than focusing on one. Also, if you are putting yourself in a position to rely solely on stocks you need to take a serious look at your overall investment plan and see where changes can be made. Mutual funds provide a little safer bet when it comes to your financial future. Again there are no guarantees but these are much safer bet than securities and will help to diversify your investment portfolio and your retirement plans.
Tip #5. Maintain Emotional Detachment. Basically this suggests you don't fall in love with a stock. It is the capacity to understand and regulate your emotions so you can distinguish between emotions and facts and then use this information as a guide for your thoughts and actions when buying and selling securities. Investors must guard against developing an emotional attachment to the stocks they invest in. Analyze your stock picks with cold, emotionless scrutiny, relying on the facts as they are, not how you want them to be. For example, instead of getting caught up in the insanity of swing trading or short selling, try setting entry and exit points and sticking to your guns. Dangerous emotions such as hope, faith and denial must be avoided at all cost. When it comes to dealing with bad picks, mistakes and losses, the first cut is the cheapest.
---------------------------------------------------------------------------------------------------------
About the author: Golan Michaels is a online stock trader offering investment advice, stock market information and analysis of current market trends at the following website: Stock Market For Beginners
TAGS : Stock Market For Beginners
No comment (Add comment)
