A Beginner’s Guide in Investing in the Stock Market

A Beginner's Guide in Investing in the Stock Market

Taking the plunge in investing in the stock market can be so exciting especially if you have heard a number of stories and tales how people received gains from investing in the stock market in just a couple of months. But, before you rev up all those adrenaline in you and invest in the Stock Market, read on for a few tips:

1. First, you should have the proper mindset.

Investing in the Stock market is not an everyday bed-of-roses thing. What if you just had opened an account with an online broker and purchased your first stocks and you see your portfolio bleeding? Will you curse the person who got you into this mess? Having the right mindset while managing your expectations of the market can help you go through the lows of the market. You should be aware that there would be times when the market is bleeding and you’re losing money but don’t worry for as long as you’re not selling your stocks, you only have what we call paper losses. You can try to buy more stocks during the dip so that you could average down for a potential bigger gains. Another golden rule is to leave your investment alone for the medium term – at least three and preferably five or more years. A stock market investment needs time to develop, and huge gains in short periods are unlikely. Time, not timing, is the friend of the investor. If you join any related forum in any social media websites, don’t get swayed easily with other people bragging how huge their gains are in a matter of days/months. Stick to your plan, accumulate more and more shares of the company you’re invested in until such time that you can sell your shares for an even bigger gains, yes even bigger than with the gains of swing traders.

2. Don’t put all your eggs in one basket or in other words, diversify your portfoilio.

If you happen to have P100,000 right now, don’t make the mistake of buying shares from only 1 company. Spread the risk so that if, for some reasons, one company did not deliver, you have other companies in your portfolio who could make up for your losses in one company. You can buy as many shares from many companies but limit it to 5-6 companies only. If you could only allot P8,000 per month to your investment, then buy shares from 2-3 companies only. This will allow you to buy more shares in a single company every month maximizing transaction fees you have to pay for buying stocks. Transaction fees may seem to be minimal but if you will buy shares from the same company more than twice a month, this seemingly small transaction fees add up raising your average price for a stock. Remember, your goal is to beat the market price. Your average price should be lower than the market price for bigger gains when you sell the stock.

3. It is advisable to buy shares from the companies you’ve chosen every month. If you can monitor the market, buy especially during the dips. You can review the stock historical prices for you to have an idea if you are purchasing shares at a price lower than its price the previous days. You can check the historical prices of a stock at The Wall Street Journal website. You just have to enter the stock code at the upper right portion of the website and wait for the drop down menu to appear. Select the correct stock from the choices that will appear. Then look for Historical Prices at the middle of the page. You can choose the date range, depending on your preference. You can quickly scan the lows of the stock so that you have an idea how the current stock price fares.

The principal advantages of regular investments is that you can do so even if you don’t have a lump sum, and putting money into the market over time means you don’t buy when the price per unit may be high.

Regular savings are also flexible in that you can stop and start them when you like and increase and decrease the amounts you save

3. Ask an expert.

As you are a novice in investing, you can subscribe from a number of groups providing an assistance for a fee. As much as possible, don’t settle for free stock updates. This will be your million investment in the future, you want to make sure you get a sound advice. Don’t settle for less. You need proper guidance especially now that you are just starting out. You can learn a lot later. I personally advise joining the Truly Rich Club. Click here to join now!

That’s it! I hope you have fruitful years ahead 🙂

 

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