Stock Market Investing Tips for Newbies

If you want to make money in the stock market, there are tips that you can follow to be successful.

Profit can be made by investing in the stock market, but you need to apply a few simple principles taken from the experience of investors that have made it big.

There is no easy and quick way to riches, except maybe winning the lottery.

Set Long-Term Goals

You should know your purpose when investing in the stock market.

If you want your cash back in six months, a year or five years you need to look for a different investment.

The stock market is volatile, and there is no certainty that what you invested will be available when you need it.

You need to find out how much capital you will need and the time when you need it. There are free financial calculators that you can get on the internet.

Retirement calculators can range from simple to the more complicated which includes integration with future Social Security benefits.

You can get these from MSN Money, Bankrate, and Kiplinger. Stock brokerage firms offer the same calculators.

The growth of your portfolio will depend on these factors:

• the capital you invest
• number of years you invest
• amount of annual earnings on your capital

The best tip is to start saving as soon as possible, save the biggest amount that you can and get the highest return possible.

Know your Risk Tolerance

Risk tolerance is a trait that is based on genetics. It can be influenced by income, education, wealth and age.

Your risk tolerance is how you feel about risks and the amount of anxiety you feel when risk is present.

A good example would be, are you willing to risk $100 to win $1,000?

Perception can change over time. Riding a car or flying in an airplane can be perceived as a high risk in the early 1900’s, but not so much today as they have become common modes of transport.

Many people would feel that riding a bike may be more dangerous with a good chance of getting into an accident.

This idea of perception is vital, especially in investing. As you build your portfolio, you learn more about how stocks are bought and sold, price changes that are present and the ease or difficulty in making your investments liquid.

It would help if you never owned an investment that can keep you up all night. Anxiety stimulates fear which can trigger emotional responses to the stressor.

This is when a bad decision can be made because no proper analysis is performed.

 

Control Emotions

One of the biggest hindrances to stock market profit is the inability to control emotions and make good decisions.

The companies reflect the combined emotions of the entire investment community in the short term.

When the majority of investors are worried about a company, the stock price is likely to fall. When many investors feel good about the future of a company, the stock price tends to rise.

An investor who feels negative about the market is called a “bear” while those who feel positive is known as a “bull.”

During trading times, the bulls and the bears are reflected in the constantly changing price of securities.

These short-term changes are driven by rumors, speculations, and hopes rather than logic or an analysis of a company’s assets, management and prospects.

Stock prices that move contrary to expectations can cause tension among investors. Do you sell to avoid a loss? Should you buy more? Should you keep the stock and expect it to rebound?

When you buy a stock, you should have a good basis for doing so. Your reason for buying or selling should have clear factors and expectations.

You need an exit strategy in place and stick to it rather than making an emotional decision that can cause more losses long term.

from Annually http://bit.ly/2Ge1KlU
via IFTTT