Can I afford to invest? is a question that all investors should ask themselves.
America has always been a place with a lot to offer. No matter what happens to our economy in the next few years, it is likely that there will be a lot of good investment opportunities. New companies with a lot of energy will start up and look for venture capital. Companies that have been around for a long time will come out with cool new products. One industry or another will do better than the rest for a while. And there will, of course, be deaths as well. There will always be.
If this activity is carefully evaluated and done at the right time, it will pay off for the investor who is paying attention. There will be chances to buy stocks before they become popular and start to rise, or to buy a Blue Chip stock at a low price when it is temporarily out of favour. There will be stock splits, dividend increases, new issues, mergers, spin-offs, and the rise and fall of stock prices, which are all part of the restless life of the market as a reflection of American business.
If you have never invested before, you will be tempted.
Whether you make money or not depends on how you answer the first hard question about investing: Can you afford it?
It's a tough question that only you can answer, because it depends not only on how much money you have but also on what kind of person you are. In fact, it is a bunch of questions all rolled into one. You want to know, first, if you have enough money to invest, second, if you can handle the risk that comes with buying stocks, and third, if the market is a safe place for you to be.
Let's look at them one by one.
Your Money Situation: One thing needs to be said right away: you don't have to be rich to invest. People who don't own stocks often say that it's a game for rich people. This could mean that the market is too hard for the average person to understand, that brokers don't care about small orders, or that only people who can lose a lot of money without feeling bad about it should invest. No matter how convincing these arguments are, they are all wrong.
A recent survey by the New York Stock Exchange shows that almost half of all people who own shares make between $5,000 and $10,000 a year. Since 1956, 3,860,000 people have bought stocks, and the average income of those people is $6,900.
This seems to show that it's not too hard to learn how the market works and that it's not hard to find a broker who is interested and pays attention. It's also likely that these people are shareholders who know how much a dollar is worth and aren't in a position to laugh off losses.
We'll talk more about the goals a small investor might want to reach and the kinds of investments that can be made with a small income. The takeaway here is that investing isn't about adding to a fortune you already have. Instead, it's about having some money, no matter how little, to start with.
No matter how much money you make or how much you earn, you can invest if three things are true:
If you know you'll have a steady income.
If you can pay your bills and keep up with your obligations as they are now.
- If you have a stash of cash to use in case of an emergency.
First of all, these rules are safety measures made necessary by the fact that stock prices always change. You should never let outside events tell you when to buy, when to sell, and how long to hold on to something. Investing should only be done with money that you can honestly and legally set aside as extra. With a steady income and your bills paid every month, you know where you stand.
stand and how much can be saved up in case a good investment opportunity comes up. Or, of course, if something goes wrong. If you need cash quickly to pay a hospital bill, an insurance premium, or your income tax, you should try to get it from your savings account instead of selling your investments. Whether your stocks are going up or down, you are likely to lose money. When they are going down, you may sell them for less than you paid for them, and when they are going up, you may sell them for less than they could be worth.
You can also choose what you want when you have a reservation. Even if you have a few hundred dollars sitting around doing nothing, that doesn't mean it's time to buy stocks. We're not in a hurry. "The market is always there," as the experts say. If you don't like the way the market is going or the price of a stock is higher than you want to pay, a reserve gives you the freedom to wait until things are better.
Lastly, a reserve makes it possible to invest over time instead of all at once. You will hear both sides of this argument as you learn more about the market. Some experts say that if something looks good, you should put all of your investment money behind it. Others will tell you not to be too greedy and suggest making small investments in different places and at different times to spread the risk. This is not the place to talk about how good these methods are. The point is to give yourself the freedom to move in any way that makes sense to you.
Remember that your income doesn't have to be big as long as it's steady and gives you money left over after you've paid your bills and planned for trouble. The extra money doesn't have to be a lot, either. People have said many times that saving is about being consistent. No one thinks $5 is too little to put in a savings account, so don't worry if that's all you can save each week for your investment fund. In most markets, brokers can usually suggest a number of good stocks that sell for less than $20 per share and have high yields.
No rule says how many shares an investor has to buy. A broker will help you buy a single share if you can pay for it (plus commissions). Through the Monthly Investment Plan, you can buy a fraction of a share, but you have to put in at least a certain amount each month.
To invest in the Forex, you will probably need a cash reserve of around $400. To start, you can invest anywhere from $1 to $10 per pip, then reinvest your profits.
So, investing in Forex requires a much smaller amount of money, but it is more risky.
The risks will be lessened with good Forex software.
