Are you interested in learning how to invest in the market, but don’t know how to begin? Check out this beginner’s guide to getting started with stocks.
Everybody wants to get rich.
One thing a lot of people learning how to build their fortune come across is investing in stocks. Unfortunately, the stock market is complicated, and picking stocks can seem like a complete mystery at first.
Use this introductory guide to learn about getting started with stocks and what you need to succeed as an investor.
Getting Started With Stocks: The Basics
Investing in the stock market is one of the best ways to build wealth. There are two broad approaches to investing in stocks, long term investing and short term investing.
Long Term Investing
Long term investing will be familiar to anyone with a retirement account. You buy stock and let it grow. This allows you to put your money in high-quality companies and benefit from their success.
You can pick individual stocks or invest in something like a mutual or index fund. The Dow Jones Industrial Average is one of the most commonly indexed. You can learn more about how that works by checking out the DJIA today report.
Short Term Investing/Day Trading
Short term investing is more about taking informed risks on individual companies. If you can run the numbers and compare industry, market, and investor data you can figure out how to beat the market average.
A subset of short term investing is day trading. Day traders develop systems to try and predict very short term movements in the market. They make money using the daily volatility of individual stocks.
A successful day trader looks for indicators on a wide basket of stocks then makes calculated investments. They need nerves of steel and the discipline to stick rigidly to their plan.
Have a Plan
If you’re just learning to invest in stocks you need to develop a plan. You don’t want to just start placing investments randomly. That’s more like betting that proper investing.
Do your research and figure out what kind of investor you are. If you can’t handle sudden swings in value day trading definitely isn’t for you.
Most people find that they prefer long term investing. There’s strong evidence that it’s more successful over time than even the most aggressive short term trading.
Having a plan means nothing if you don’t stick to it. Disciplined investors are successful investors.
The worst possible thing you can do when things suddenly change is to pull your money from the market. There’s an old saying among seasoned investors, time in the market beats all.
Create a plan and follow through on it. Put your money in successful companies that match your personal beliefs. Let it grow there over time.
Never Risk More Than You Can Lose
Probably the most important thing to learn when getting started with stocks is to never risk more than you can lose. Investing is never guaranteed. You’ll likely see losses at some point. Make sure you’re able to deal with the downsides as well as the gains.
You can learn more about living a healthy, successful life by checking out our other career and lifestyle articles here.