Every beginner investor wants to learn how to be successful in the marketplace. To an outsider, the stock market might seem like a fascinating and surreal world. But this fast-paced and somewhat confusing realm is a lot easier to understand than you might think.
We’ve all heard stories of people either making it big or losing it all on the stock market. So you might be somewhat reluctant about joining the game. However, you should know that, contrary to popular belief, investing in the stock market is not a gamble if you know your way around.
With a few easy steps, a lot of patience, and some willpower, you too can become successful investing in stocks. Here’s a short step-by-step guide to help you with your stocks, in a style similar to our brief analysis of how to be a hedge fund manager.
1. Don’t Dive Heard First
In order to make money investing, you have to have starting capital. Don’t use your lifesavings or an inheritance you’ve just received for this purpose. If you’re looking to invest, you should already have a secure job and a bank account with an emergency fund, in case anything should go wrong.
See the rest of this step-by-step list on how to be successful in the stock market universe on the following pages:
2. Research, Research, Research
Prior to starting to buy stocks, you should take the time to read everything there is about the stock market and financial investments. There are a lot of great book around that can teach you the ropes, such as: The Intelligent Investor (Benjamin Graham), One up on Wall Street (Peter Lynch), The Essays (Warren Buffett), and Common Stocks and Uncommon Profits (Philip Fisher).
3. Practice Makes Perfect
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Don’t start by trading real money. You can follow the market and make pretend investments on paper. Record all the data and track how your shares pay off both short and long term. Also list a few reasons for why you think some shares are worth buying. This step will take some time, but it will prepare you for when you start trading real money.
4. Consult with a Broker
The stock market is ever changing and you should never shy away from learning. Discuss your options with brokers, financial advisers, or bankers. These types of people are highly specialized in giving you the best possible financial advice. However, do make sure that you only deal with reputable professionals, as there are a lot of scammers lurking out there.
5. Start Small
Begin by taking baby steps. Don’t waste all of your money on risky investments. It is advisable that you buy small portfolios, of up to 50 stocks from well renowned companies with a proven track of profitability. Although your earnings will not be sky high, you will at least be staying on the safe side, which is crucial for the first months you start playing the market.
6. Be Constant
Investing in the stock market is a long term endeavor and you must be diligent at it. Don’t sell the first day your shares drop a little, out of panic. Equally avoid selling them the very first day the rise. Patience is key when dealing with the stock market. In addition, try to buy new shares every single month.
As a final word of caution, avoiding any stock tips or get rich quick promises. More often than not, these are just scams that can make you lose big money.
