Category: Stocks

The S&P 500 index was first developed in 1926, and since that time the market has offered annual returns of just under 10%.

Even with inflation cutting those profits, investments can be lucrative with the right strategy—unless you’re not sure how to start investing.

If you’re a stock market beginner, you may not know where to begin. Fortunately, we’ve put together these four tips to help you feel confident about jumping in.

1. Set Down Your Goals

It’s investing 101: you’re in it to make more money. But when you’re playing the stock market, it’s just as important to know when and why you need that money as it is how to make it.

For example, if you’re looking for quick cash to help you out in the next few months or even years, the stock market might not be the right opportunity for you. Instead, it might be better to find an instant cash loan locally.

On the other hand, if you’re saving for your long-term future—retirement, a home, college tuition for yourself or your kids—the stock market is a good choice. Figure out when you need your money back using simple math or online tools like a retirement calculator. Knowing this can help you with the next tips.

2. Know How Much Risk You Can Tolerate

Your risk tolerance depends on many factors. The biggest of these is how much time you’ll have before you need to take out your money. However, it also depends on your wealth, income, education, and even your psychological ability to tolerate potential loss.

Online tools and questionnaires can help you understand your tolerance level.

3. Diversify Your Investment Portfolio

This is the best strategy for managing risk.

Think of it this way: if you own stocks in different companies and different industries, each stock will perform differently over time. A small number of your stocks may plummet, but most of them will grow in different increments from small changes to huge leaps. This allows you to recover from the partial loss to see overall profits.

4. Keep Your Emotions Out of It

Despite what the movies might have you believe, the best investment strategies are based on logic—not emotion.

If you constantly track your stocks, listen to industry rumors and speculation, and worry over price fluctuations, you may end up wavering from your initial plan. Instead, know your limits: when you buy a stock, decide how much loss it would take for you to sell. Until that point, hold fast when your stocks perform differently than expected.

Keep Researching Stock Market Beginner Tips

The market is constantly fluctuating, which can be overwhelming for a stock market beginner. However, don’t be afraid to get started in small increments, as the best way to learn is often to dive in.

You’ll need to keep learning and researching as you go, especially because stock purchases aren’t one-and-done decisions. But with a little work, you’ll reap great financial benefits. Check out our other posts to see more finance tips for stock market beginners!

About 50% of the United State’s population owns stocks. Some of these stocks are hand-picked by their owners and others are issued to them through their retirement handlers.

No matter how you came into stock ownership, it’s always good to know what elements go into successfully picking stock market investments that are likely to yield returns. Therein lies the purpose of this post.

Below, our team shares some stock market investment rules of thumb that can help you get to the bottom of which investments might work best in your portfolio.

1. Know Your Goals

The number one thing you need to do when assessing a stock market investment is to understand what your goals in the stock market are.

Is your goal to earn steady growth over a long period of time? Are you more focused on scoring quick wins so you can cash out fast returns?

These factors will determine if your money is suited for more stable investment options like stock in Apple or if you should be picking up stock certificates (which you can read on here) for more dynamic, off-brand companies.

2. Understand the Company You’re Investing In

It may seem like a no-brainer but you’d be shocked by how many people pour thousands of dollars into companies they know absolutely nothing about. If you do nothing else when assessing a stock market investment, take a moment to learn a little bit about the company you’re thinking of buying.

What does the company produce? How much do a company’s employees generally like working at their place of business? How long has the company been in operation?

Understanding a handful of simple factors surrounding your organization can give you an easy and important context that can help you determine if an investment makes sense.

3. Weigh Analyst Predictions

Analyst predictions are not the be all end all of whether or not you should put money into a stock. It can be helpful to weigh professional opinions though so do take a moment to assess what people are saying about your stock.

Are analysts recommending sell-offs? Are they telling their followers to buy?

If you’re seeing patterns in recommendations, listening may be helpful.

4. Consider Diversity Implications

Having a diverse portfolio adds stability to your investments when economic strife hits. That’s why we always recommend buying new stocks that add to your portfolio’s diversity as oppose to stocks that continue to bolster your position in a single industry.

To gauge the diversity of your portfolio, break your holdings into business categories, and ask yourself if category A went out of business, how would category B fare?

Optimally, category B would hold stable or pick up momentum.

5. Are You Excited to Own This Company?

This checklist item isn’t necessarily needed but it’s something we think is important to keep you excited about investing. In a perfect world, you’d be interested in all of the companies you’re putting money into and that interest would keep you engaged in that company’s dealings.

So, are you excited to own a piece of the company you’re thinking of investing in? If you are and everything else checks out, proceed with confidence.

A Good Stock Market Investment Can Secure Your Future

The reason why picking a good stock market investment is so important is because people build their retirements on the foundation of solid stock picks. If securing your future is as important to you as it is to most, getting fluent in investing should be a priority in your life.

We hope our post has added to your interest in investing in stocks competently and we welcome you to browse more content on our blog for additional guidance.