This is the beginners guide to make money in the stock market!
The stock market is still alive and well. It’s a pretty interesting career choice but being good at it doesn’t come easy. Some people have taken years to understand exactly what’s going on and how to profit off the market.
But in today’s day and age, the Internet can do wonders for people who are starting a new business or job. In the stock market case, you can find some beginner tips that should give you a heads-up on what to expect and how to proceed.
Being a stock market broker comes with plenty of benefits but a lot of work. You need to be attentive to detail and follow the market closely. It’s not as easy as just giving out money for a project or investment and expecting it to go well.
Many brokers spend countless hours of research on how the market flows, which currencies will heighten in value and which will flop completely. Usually, though, this isn’t as confusing as it seems. Mainly because currency value fluctuations aren’t as ludicrous as one might expect. This isn’t saying large changes don’t happen; just that they don’t happen too often.
Again, this all depends on the global situation. For example, Brexit will have a huge impact on the stock market according to experts. What kind of impact is still unknown?
In any case, we’ve compiled a short list to help you understand the process of working with the stock market. Keep in mind that these are beginner tips and generally don’t apply to someone more experienced (as they already know about all of this). Still, it’s a good thing to have some source of information to help you out when necessary. It can also help with debt relief if you know what you’re doing. So, without further ado, here are a couple of tips on making money in the stock market!
Select your Investing Style:
Stock investing isn’t as bland as in. You can only do it one way. There are multiple different investing styles you can choose, but we’re going to list the 2 main ones. These have been used by countless people and are generally your best bet, especially when starting. So, which ones are they?
DIY – The “Do-it-yourself” style means you aren’t going to get financial advisors or robo-advisors (more on that in a bit) to help you out with investing. You do everything yourself; research the market, place investments, buy, sell, the whole shabang! This is great for people who want to make their own fortune and their own mistakes (from which they learn and improve) but isn’t as good for beginners. Of course, if you’re feeling feisty, the DIY is perfect for you!
Robo-Advisors – Low-cost investment managing; that’s what you get from this investing style. You don’t directly influence the market (as in making investments, etc.) but do so through a medium or a company. In this case, a robo-advisor can be found in brokerage companies. Most of them offer this service nowadays. All you have to do is tell them your goals and how much money you’re working with, and that’s it – they take care of the rest!
Open an Account:
You can’t start investing without an investment account. So naturally, creating one before you start is necessary. If you opt for the DIY option, you’ll need a brokerage account. Having a brokerage account basically lets you buy stocks, funds, and many other investments. However, before you do, make sure to research properly! Not all stockbrokers are good. Find the ones which correspond to what you want (trading commissions and account fees are things to look at), the selection of available investment options, tools, and investment research. If you favor funds, go for commission-free ETFs.
On the other hand, a robo-advisor account does everything for you. The services associated with the robo-advisor will require information surrounding your investment goals. After that, a portfolio will be built for those goals. This might sound expensive, but in reality, it’s cheaper than going for an investment manager (human). Robo-advisors usually cost between 0.25% and 0.50% of your under-management assets. Finally, if you opt for a robo-advisor, the rest of these tips aren’t too helpful but are still good to know for future reference.
Understand your Investment Objectives:
When it comes to creating investment goals, it’s important to realize you won’t be making huge financial gains from the get-go. The entire process takes time. Getting used to the environment, being smart about your finances, and overall not expecting success immediately are all necessary to achieve your goals.
This is why you need to take things slow. If you are unsure of what you’re doing, take a step back and find more information. The more you know, the easier it will be!
So, when creating your investment objectives and goals, be mindful. Start out with a small profit margin that you want to achieve and go from there. As long as you’re careful and know what you’re doing, you’ll avoid plenty of issues that beginners encounter when starting their brokering career.
Set a Budget:
What you need to remember as a beginner in the stock market is that you don’t have infinite funds. Sure, a currency might go down in value, and you’d be tempted to buy as much of it as possible (so you can resell it high), but this isn’t always a good idea. Truthfully, it’s never a good idea to devote all or almost all of your funds into one purchase.
The currency values change constantly, and even though most of them come back from a dip, you never know what might happen. Researching is what’s important here; following the market trends and global occurrences (Brexit as an example again) directly impact what’s happening in the market. So be smart. Set a normal budget. Don’t go all out instantly. Leave some of your planned finances as a back-up (even if it means having a slightly smaller budget).
Even the best brokers had their fair share of problems which should give you the confidence to continue even if something happens. And that’s where the emergency budget comes into play.
Buy Low and Sell High:
The main game of trading currencies is to buy low and sell high. This is one of the first things you learn when starting because, well, it’s how you make money! The problem is, impatience can be problematic. Here’s where it gets tricky:
Say a currency drops in value and the research you did has shown that. You’ve prepared and bought some of it for cheap. However, when is the perfect time to sell? Do you wait longer for higher potential (but a greater risk) or do you wait for a slight increase in value and then sell?
Unfortunately, this comes down to you and what you find researching. We’d recommend going the safer route until you get the groove on. Yes, it is the slower way, but you won’t be losing out as much. Lastly, ask yourself these two questions:
“How much money do I need to start a stock market investment career?”
“How much money should I invest?”
Build a Portfolio:
No matter what you do, a portfolio gives others an insight into your skills and accomplishments. However, when it comes to the stock market, the word portfolio has a completely different meaning.
It’s basically your collection of currencies. Maybe you want a portfolio with only two or three currencies, and it’s dedicated for only that. Or maybe you want a diversified portfolio containing plenty of different currencies.
Continuing from the previous point: Mutual funds and a small budget mean your best option is getting an ETF. ETFs generally don’t cost much ($10 or less) because they trade like stocks.
As far as the amount of money you should invest, do it through your portfolio. Use a large portion of it for stock funds. Everything else can be in bond funds.
So take it slow and build your portfolio properly – because it directly correlates to knowing how much to invest!
Risk management is a big deal in the stock market. Remember the mention of an emergency budget? That’s basically this. You might know exactly what you’re doing and make all the right choices, but in the end, your efforts may not get rewarded. This is just the nature of the investment.
And that’s also why you need proper risk management (or contingency plans in case something goes wrong). If you don’t, your career might end in a flash, depending on the severity of what happened.
To conclude, the stock market is a tame beast if you take your time to know it. Don’t rush things; always make calculated risks (where possible) except when they’re bound to flop and organize everything. Get all the valuable info you can find and remember all of that (or write it down).
You’ll get the ropes of it eventually but for the time being, don’t be afraid to help yourself out!