01. April 2016 · Comments Off on Think Investing Is Too Risky For You? Think Again! · Categories: Stocks · Tags: , , ,

Individuals everywhere have begun to see the benefits of stock market investing, though not many understand how to do it well. They throw their money at the market with high expectations, and instead receive only frustration. If you wish to know all you can before you start taking a risk, read on for all the information you need to get started.

Before choosing a broker, do your homework first. Look at the resources offered online that can give you an assessment of each broker’s reputation and history. These resources are usually free. Investigating an investment broker’s background is the best way to protect yourself from investment fraud.

If you would like to make the maximum amount of money from investing in the stock market, try to create a long-term plan. You will find more success when your expectations reflect the realities of trading, rather than attempting to look for a crystal ball that doesn’t exist. Hold stocks as long as you need to so they’re profitable transactions.

When shopping for a broker, whether an online discount broker or a full service broker, pay special attention to all the fees that you can incur. Take into account the fee per trade, as well as anything else you may be charged when you sell your stocks. This small fees can quickly add up.

You should have a high bearing investment account with at least six months worth of salary in it saved for just a rainy day. This way if you are suddenly faced with unemployment, or high medical costs you will be able to continue to pay for your rent/mortgage and other living expenses in the short term while matters are resolved.

When you choose an equity to invest in, don’t allocate more than 10% of your portfolio into that company. This way, if the stock you have goes into free fall at a later time, the amount you have at risk is greatly reduced.

Instead of an index fund, consider investing in stocks that beat the 10 percent annual historical market return. The growth rate of projected earnings added to the yield of the dividend will give you a good indication of what your likely return will be. A stock whose earnings are growing at 12% that also yields 2% in dividends offers you a potential return of 14%, for example.

Don’t try and time the markets. It has been proven that steadily investing over a large period of time has the best results. Figure out how much of your money you can afford to invest. Keep investing within your budget and do not be swayed by losses or big profits.

After gaining some experience, you might be interested in learning how to short sell. This occurs when you loan stock shares. As an investor, you essentially borrow shares of stock that you don’t own, as part of a transaction that you will complete at some later point in time. An investor sells the shares and repurchases them when the price of the stock drops.

To make good-sized profits from the stock market, develop an investment plan and write it down. Include what you want to buy, when you’ll sell and what you’ll do as the next step. It should also include a clearly defined budget for your investments. This will help you to make prudent choices, instead of being rash and relying on your emotions.

Stay away from purchasing too much stock in the company you work for. Although it seems good to support your company by owning its stock, there are certain risks involved. If your company begins to not do well, not only will your income be at risk, but so will your portfolio. If your company gives you a discount for purchasing their stock, it may be worth the risk to have a portion of your portfolio contain your company’s stock.

Stick to a basic investing plan when you are new to investing. It can certainly become tempting to try every new strategy you read about, and there are tons of “huge profit potential” plans out there, but new investors do best by choosing a basic strategy and sticking with it. You will end up saving a lot of money as time goes by.

Don’t listen to stock tips or recommendations that you didn’t ask to hear. You should, however, listen to what the financial advisor you’ve chosen has to say, considering part of the reason you probably made that choice is because the advisor has done well for himself and/or his clients. Don’t pay attention to others. Always do research yourself to supplement stock advice.

What you just read has provided you with knowledge aimed to help fuel your success in the stock market. You should be in a good position to begin investing your money and to watch it grow. Just bare in mind that risk is a natural part of investing, and you will not see gains unless you take risks. Apply these tips, learn from your mistakes, and work toward minimizing risks as you continue to see profits. This is the advice of professionals, and it often leads to success.

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