Are you a beginner to invest in stocks? Or, are you a returning investor who stopped investing after the last failed attempt? This article won’t make you an intelligent investor, but it will help if you with some basic steps of investing in stocks.
Here are some common reasons why beginners either don’t begin or stop investing in stocks:
As a beginner, I purchased the stocks of a company. Unfortunately, the stock value remained the same or even lowered after few months. It disappointed me to continue with the investment into stocks.
I’m not a gambler. Why should I gamble with my hard earned money into the stocks? I heard many people ruined their career, reputation, and money into the stocks market. I don’t want to move ahead. Stocks investing can be compared with the addiction.
My friend and I started investing together. He kept his money into a guaranteed return account. And, I purchased stocks. No wonder why he sleeps stress-free.
I started investing in stocks. I remember spending my precious morning hours, lunch time, and even after office hours, into the stocks' learnings.
It’s not a game for someone who earns a decent income. It’s for those who’re in a low wage job.
My mind was always engaged in watching the stock price. I remember the day when my favorite stock went up so high. How disappointing it was to miss that opportunity! I also remember the day my friend insisted me buying a penny stock. I agreed and bough some penny stocks. But, not even a penny left in those stocks after a few weeks.
I heard it’s difficult to keep your eyes off from the stocks throughout the day.
I wish my girlfriend doesn’t visit me on weekdays or doesn’t call me around stock market timings. I can’t resist watching stock news. It’s a distraction to my work and my personal life. Are stocks more important than my girl friend?
How can I invest in stocks if I have a demanding job? I heard a story of a friend who works as a software engineer. She planned to sell some stocks when the price of her stocks dropped to 70% of its purchased value. But, the auto-alert didn’t work as expected. She couldn’t watch the market too as there was an urgent bug in the software she supported. What a miss.
And, many more…
Now, let’s look at some advantages of investing in stocks:
- It’s definitely important to understand how the stock market works. How companies make money? What's the bigger picture of the economic system?
- It's an opportunity to invest in the businesses we believe in and be profitable. If we own a stock of a company, we own the part of that company.
- In the life, we have to take some calculated risks. All the investment types have some risks but also has rewards associated with it. It's an opportunity to grow your investments. Not investing is also a risk of losing the money.
- If you own a retirement account in the US, is it possible to not invest in the stocks market and still grow your money? Do we not want to ensure our hard earned money is not inflated over the time?
- In the future, if you want to start your own business, investing in stocks helps understanding the system of stocks market.
We can’t walk away from investing in stocks. If we agree that investing in stocks is inevitable and you’re willing to begin or resume your journey of investing, let’s look at some basic Dos and Don'ts of investing:
Dos:
Learn the basics of stocks and accounting.
Begin to invest as a long term investor. Invest the money that you don't need for at least three years.
Maintain a balanced and a well diversified portfolio. Invest in at least 15 stocks.
Plan a high level approach to your investing style. For example:
Learn the basics of sectors of the stocks market. Learn about key stocks in all the market caps: large, mid, and small.
Decide which sectors you choose to invest in for a long term.
Decide your plan of investing. When, which stock, and how much quantity you will buy.
Before you buy a car or a home, do you research it well? Do even more serious research of the stocks you’re buying or selling.
Just like your career or education growth plan, plan a fixed time in the week to regularly learn about the stocks. Sign up to learn from authentic sources.
Don’ts:
Don’t invest if you don’t have money that you can forget to touch for three years.
Don’t buy stocks that you don’t understand. Even if your friend turned rich with a stock you don’t know anything about. As a long term investor, don’t buy stocks more than you can keep a track of. This number might vary between 15 and 30 total stocks portfolio.
Don’t attempt to time the market. Don’t buy in a rush. You’re not buying the stock just for a day or a week or a month. Remember, don’t sell before three years.
If you plan to sell or buy stocks of a company, don’t buy/sell for the total quantity. Plan it in at least three phases.
Don’t spend more than the decided time in the day and in the week for the stocks investments.
So, are you ready to begin the journey?
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