Everyone wants their stocks to go up in value. So, they take their money out of the bank and start putting it into investments. When first-time investors take their money out, they often feel nervous and worried. The stock market is a storm where a lot of people have died.
Learn how to buy a stock is the first step. Before they learn the simple steps to buying a stock, many investors jump right into learning how to invest and using techniques that have worked for other people. Without a good understanding of how to buy stocks, the strategies won't work.
The strategies do work, but only if the investor picks the right stocks for their own portfolios. Investors don't know what to buy or when to sell based on the strategies. They only tell investors how to run their stock portfolios. The investor must first buy stocks.
First, you should read the Wall Street Journal.
Investors can learn from more than just the Wall Street Journal. The business section of your local paper can often give you information that will never make it into the Wall Street Journal. But The Journal can teach new investors how to talk about the market and the basics of how it works. The more you read, the more you learn about the markets, which makes it easier to look into stocks.
Step #2: Pick Industries
No one expects an investor to build a portfolio out of a few mining stocks, a couple manufacturing stocks, a company that makes drugs, a company that gathers natural resources in other countries, and a company that studies marine life. This is a bad way to spend money. Investors should instead focus on one or two industries and learn as much as they can about them.
You can do research in many places. Sometimes, a simple website like finance.yahoo.com or Morningstar.com can give you all the information you need to find an industry you won't get tired of.
Step 3: Choose how much money to put in.
This is one of the most difficult things about investing. Many people can only invest a certain amount. They have some success and hit their "pay load." Then temptation starts to come. If they had put in $10,000 instead of $1,000, they would have made 10 times as much money. What if they had spent $100,000 instead? This is a dangerous way to think.
Never invest more than you can afford to lose is a good motto, but it's much harder to follow in real life. As time goes by, some investors start to think about how much money they "could have" made if they had invested more. When a stock does well, this makes people angry instead of happy.
At some point, they start putting in more money than they can afford to lose. Then they get mad -
Step 4: Stay away from crowds
Some new investors think that the best way to buy stocks is to buy the ones that are "hot" at the moment. They look quickly at websites and financial documents until they find something "hot." They haven't met the Bull or the Bear yet, which is too bad.
People who can figure out why a stock is hot at the moment are the only ones who should buy it. It's just as risky to buy on a whim or a gut feeling. By the time a stock is hot, the "real" investors have already cashed out, having made their money, and are leaving before the crash.
With these four steps, a new investor can buy a stock that should do well instead of one that will hit rock bottom in a few weeks.
