Investing in stocks can seem very exciting to someone who is just starting to dip his or her feet in this exciting world of stocks and shares. Many beginners make the mistake of jumping in blind without much knowledge of how it all works. This is unwise and will result in financial losses if you’re blindly swinging for the fences. This article will give you several points that you should be aware off before even investing your money. Knowledge is power and the better informed you are, the better investments you will make.
* Do NOT put all your eggs in one basket
A very common mistake people make is that they see a certain stock’s value rising and they quickly dump all their money into this stock. All of a sudden if the price falls, they suffer a massive loss. Do not invest based on greed and emotions. You want a diversified portfolio.
* Stocks are a long term investment
Stocks are not a ‘get rich quick’ scheme. In almost all cases, they’re a long term investment and you should not buy stocks if you’re going to need the money within a few years. Companies appreciate with time and stock values go up over time. By taking your money out too early, you’ll miss out on good returns that will come in future.
* Choose the right brokerage
No brokerage is perfect but you should choose one that is good for you. It would be a good idea to visit a few brokerages and look at their transaction fees, etc. You may note that some may have high fees but offer a lot of assistance to their clients while with other, the fees may be low but you’re left to fend on your own.
So, choose one that you feel comfortable with and go with it.
* Dividends are a great source of income
Wise investors usually don’t think of cashing in their profitable stocks too fast for a quick reward. They just leave their money in there and get dividends every few months. You’ll be amazed at how these small payouts accrue over time. If you are a savvy investor, you’ll reinvest these dividends into other profitable stocks and multiply your returns. By doing so, your income will increase exponentially. Earning a sustainable income from dividends will take time and patience but if you can do it well, you will see your wealth increase in future.
* Spread out your risk
You want to invest in stocks of different companies over different industries. In the event that one industry takes a hit for some unforeseen reason and stock prices collapse, your stocks in other industries will probably not be affected. You won’t suddenly see major losses. It’s good to do lots of research about the company and industry before investing your hard earned money in their stocks.
Most people who fail miserably at stock trading do so because they invest in stocks that they know nothing about. They treat investing like a gamble and hope for the best. You want to be prepared. Even if it takes you a couple of months to learn the ropes and understand the process before investing in stocks, it will be worth the time and effort and your hard work will pay dividends many times over.
One of the best ways to speed up your investing success is to simply copy success. Someone who actually invests himself, who has a proven track record, and who is prepared to show you EXACTLY what stocks he invests in every day is Grant Gigliotti.
>> Check out his results with BTMA Wealth Builders Club