There is no doubt about that stock investment is a key part of building wealth. Often I am asked at an early stage investors, "How do I go about investing in the stock market?" Often, I blithely answered, "No, you're not ready yet." I say this for effect. I want people to take note and avoid getting roasted in the stock market. I want people to ask yourself the real question behind the question, that is? "Am I willing to invest in the stock market" confused! Let me explain. If you are a beginner stock market, listen!
Pyramid Investment - What shape is a pyramid of your
No, I'm not talking about buying a stake in the heavily-cut ancient Egyptian pyramid! Sound investment framework regularly appears as a pyramid - to invest first in a secure base of cash and cash equivalents (money market funds, certificates of deposit, etc.) and then moving up the pyramid into bonds (government and corporate), before you start investing in large-cap stocks and so on.
Most novice investors I know are involved in the share market without investing too early to be eligible for risk. They have not built enough, secure base for their investment pyramid first and leap-frog their way to the top of the pyramid in search of high returns. Indeed, some make the same mistake leap-frogging in the investment property is also premature. Their lack of experience and financial intelligence means that they expect to make quick and large returns, but instead often end up losing much of their hard-earned capital. As a budding sophisticated investors, we want to avoid these pitfalls. I believe in earning their right to risk. Read on to see what I mean by this.
earn the right to invest / Risk
Here's my take on all the rich through the share market investing. First of all, if you did not save at least 6-12 months of living expenses are not ready yet. Since we are interested in building wealth and learning how to become rich for life (and not just temporarily), and then we follow the process that allows us to become rich and stay rich. After you put away 6-12 months of expenditures, that are now in a position to invest in the base of your money, or the pyramids and cash equivalents. You can then move up the pyramid in the domain of government and corporate bonds, etc. Only when you have earned the right to risk. Only then have a secure enough financial footing and intelligence to now be able to invest in market share for sure.
Investing is not a hobby, and should not be treated as one. Hobbyist, novice investors get fried. They invest much of their capital, too. If your stocks soar quickly get emotional and greedy and invest more capital without sound investment basis. They can get lucky once or twice and make big gains, but more often than not, the opposite occurs. If their stocks fall they get emotional and fear to sell everything ... at a loss.
Make a dinner party-investment "Tip"
dinner parties and pub talk a great way to socialize, but not so hot when it comes to investment strategies. In fact, you can do worse than take a contrarian view and sell when everyone is talking about buying and vice versa. Instead of thinking short term and chasing the next big share of the growing tip of the dinner table, I believe it is better to behave as a long term investor. For me, this means possession of low-cost index mutual funds or traded funds (ETFs) in the most tax-protected mode, ie, using a pre-tax money in retirement accounts such as 401ks, IRAs, etc.
It should be noted that I do not think that buying individual stocks a central pillar of any smart wealth building strategies. If you've got a lot of time on your hands and a real aptitude for technical analysis has been proposed to avoid spending the rest of its stake by investing the day, hand-picking individual stocks.
if you really need, but you have already built enough security elsewhere in the investment portfolio (the framework of investment pyramid mentioned above), it's okay to play with a very small amount of capital (eg less than 10%) on buy shares directly, so long as you are thinking long term and intends to hold these stocks for years or even decades!
Know Your Basic
There are a number of share market investing trading strategies - scalping, swing trading, technical trading, share trading, swing trading, etc. If you are new to the share market investments do not think that the best trading strategy is fundamental analysis. After all, one of the world's best known and richest investor, Warren Buffet, commits a fundamental analysis of stocks and securities it purchases.
Fundamental analysis requires an understanding of key business financial indicators, such as cash flow, earnings and balance sheet positions, as well as some of the key financial indicators used to value stocks, such as P / E ratio, return on equity , earnings growth, debt to equity ratio, dividend yield, etc. the development of fundamental analysis skills will stand you in good stead in both the investment and business.
Where in the store - If you have a stockbroker
With the advent of online trading, anyone can be up to trade within 24-48hrs reading the latest edition of the "Idiots Guide to Stock Investing"! However, from my experience on-line trading platforms are filled with financial losses. Novice investors can not get torn to shreds by the online platform, but by their own lack of knowledge, technical ignorance and emotions of greed and fear.
Momentum trading through online platforms (eg OptionsExpress,, eTrade, SaxoWebTraderetc) requires you to develop the technical skills of analysis and in-depth knowledge of technical indicators (eg Moving Average Convergence / Divergence (MACD), the rate-u-Change (ROC) indicator, relative strength index (RSI), Bollinger Bands, stochastics, etc.) and identify chart patterns (eg, head and shoulders, cup and handle, triangles, breakouts, etc. ).
If you want to jump on some online trading platform and start trading stocks then this can be a very good idea to start share trading with virtual / simulated accounts. That way you can make your mistakes with phantom money.
Although I am somewhat skeptical of the average stock brokerage firms modus operandi, it can be a good starting point for budding investors. Treat the whole experience as an exercise in sleep with the enemy! Of course, you'll pay more trading commissions than you would through the online trading platform, and you May or May not make any gains. However, that said, you should at least avoid getting skin alive and you will gain some valuable insights and knowledge from the process.
In short:
Remember the words of legendary businessman Donald Trump, "sometimes your best investments are those that do not make." When it comes to market share by investing the word may be capable of! I highly recommend the early market share by investing when you are ready, ie after you have earned the right to risk. If you are interested in learning more about the concept of wealth building, then check out my website and other items.
Many beginner guides share market investing is to focus on: understanding the risk assessment methodology, the share market indices, etc. I think there is enough information out there about this already, so what I would do is offer some structure and some strategic thinking behind the market share by investing beginnings. I hope you found the article worthwhile. Thank you for taking the time to read this. If you like what you read and that it might be useful to someone else, please share ... share knowledge, share the wealth!
