Ready to build some wealth? Investing in stocks is an excellent way to get there. Learn how to get started in stocks with absolutely no experience.
Are you looking to get started in investing? You may be considering stock market investments.
Because stock market investments don’t offer a guaranteed return on investment, it’s important to make smart choices. This is especially the case when first starting out.
Fortunately, we’re here to help. Read on to learn more about how to get started in stocks so you can begin growing your investments. Who knows, you might just be the next Wolf of Wallstreet.
Rule #1: Don’t Invest Money You Can’t Afford to Lose
Just like gambling, there is never a guaranteed outcome when investing in the stock market. You should never invest money that you can’t afford to lose.
Blue chip stocks can offer more security than investments made in newer companies, however, just because a company has a wide level of name recognition, doesn’t mean that your investment is 100% safe.
Rule #2: Pick Companies that Have a Buzz
Investment advisors often recommend picking stocks that have a big buzz. If your research pays off, you may be lucky enough to pick a stock just before it splits.
When stocks are performing well, splits may occur. Click to find out more about stock splits and how you can improve your portfolio by investing before they occur.
Rule #3: Listen to the Experts
Investment tycoons like Warren Buffet aren’t household names for no reason. Their investment strategies have offered big returns again and again. Learning from the experts is a great way to help ensure that you avoid the pitfalls of early investing.
Since you’ll be trading your own hard-earned money, you need to make sure that the learning curve of early investing doesn’t cost you dearly.
So what kind of advice are we talking about? Here’s some sage advice from the $80 billion dollar man himself.
Rule #4: Invest for the Long Term
Don’t jump in and out of investments. This can be costly, especially if you’re dealing with major fees on trades.
Instead, pick companies which you believe to have a long term upward trajectory.
Rule #5: “Never invest in a business you cannot understand.”
Buffet makes a strong argument by stressing the importance of understanding the companies you invest in. If the industry, product, or business model doesn’t make sense to you, chances are you aren’t alone.
Buffet argues further that many of the biggest risks come from a lack of knowledge. If you don’t know what you’re doing, don’t do it. As Benjamin Franklin once said, “an investment in knowledge pays the best interest”.
Rule #6: “Be fearful when others are greedy. Be greedy when others are fearful.”
Instead of selling your shares when fearful, try another signature Warren Buffet approach. Buffet reminds the investor not to panic when stocks drop.
If you believe in a company, seeing a drop can be a great opportunity to buy in. Selling off shares when your stock takes a dip cement the investment as a loss.
You are right to feel unsettled with everyone wants in, however. If everyone wants a piece, there may be a bubble soon approaching.
Rule #7: Live Below Your Means
Financial guru Dave Ramsey counts this as one of his signature pieces of advice. Cut your expenses wherever possible. Make extra money with a side hustle. Get out of debt as quickly as possible, you’ll be a slave to interest and fees for as long as your debt hangs over your head.
Predatory lenders and high-interest credit cards have the ability to keep you in a revolving door of debt. Focus on paying down your highest interest debts first.
As soon as you have room to breathe, don’t splurge on expenditures that feel like “rewards”. Many of these purchases don’t create any satisfying long term changes in your life.
Beware of purchases that change your outward appearance of status. This could mean a flashy new car or designer clothing. You may look like a million dollars, but you won’t ever have anything to show for the longterm.
Begin siphoning off your excess monthly income like a miser. Keep for your personal savings and hide the rest away in your investment portfolio.
Don’t spend money on temporary rewards, build an investment portfolio that will continue to grow your wealth and you’ll create a meaningful investment in your future.
Rule #8: Diversify Your Investments
Don’t settle for investing all of your money in a single stock. This can create an unbalanced portfolio that can create major instability. Don’t set yourself up for the distress of a single company’s poor market projections.
Mutual funds, for example, can help you effortlessly create a diverse investment portfolio. It’s important to strike a balance, however. Warren Buffet is famous for arguing against creating too much diversity in a given portfolio.
While it’s true that over diversifying your portfolio has the potential to stretch your investment dollars so far that it becomes difficult to see any major gains, you must weigh the risk.
Decide what strategy works best for you and create a portfolio that speaks to your own unique investment style and needs.
How to Get Started in Stocks
Now that you know the basics about how to get started in stocks, its time to put your new knowledge to the test. Want to learn more? We’re here to help guide you in your foray into the investment world.
Visit our website for more helpful information designed to help you create a winning portfolio and lasting investments. With a little help, you can start growing investments that create wealth for generations to come.