9 Powerful Tips To Invest In The Stock Market

10 Powerful Tips To Invest In The Stock Market

The best thing about the stock market is that anyone can participate, from big company CEOs and the most respected and big brokers to teachers, doctors and basically anyone that is willing to invest and manage their money and wants their money to grow.

As with all things that interest us in life, before you start investing in the stock market, we have to first learn about all its elements, how it works and the community that it is part of, and the laws that come with it.

Not less important is the reason why we want to start investing in the stock markets and what our investment goals are. If we do not set goals we might make swift decisions that are opposite from our goals, and more make it look like gambling, instead if "Calculated risks"

Here are some tips that will help you take your first step in investing in the stock market:

1. organize your personal finances

Before you make any investment though, it is recommended that you have your personal finances in order, in other words, you need to be able to manage your money in an organized and disciplined manner. You should create a spreadsheet with your monthly budget that covers your income and expenses so you know exactly how much you can invest each month. Not totally necessary but recommended is that you pay off all your debt before you become a stock investor. Knowing how much you can spend each month, actually helps you NOT create more debt.

2. Seek advice

If you want to build a strong stock portfolio, it is important to know how the stock market exchanges work. To help you learn the ropes and make the right choices, it is recommended to find advice. There are alot of financial institutions, such as banks and brokerage companies, that have advisors who will help you know the risks you are exposed to if you want to invest in Stocks. They can help you invest your money in the right stocks and will inform you about the estimated time it will take to deliver the results that you want. But don't forget, advisors like this will need to be paid for their services as well.

3. Know your profile as an investor

It's important to determine how much time you want to spend on investing in stocks, and choose what kind of investor you want to be, your kind of profile that is. Do you prefer to hold stocks for a long period of time and spend no more than 5 or 6 hours per month on it. Or do you want to be more like a day trader and prefer to spend between 6 or 8 hours per week on it? If you only spend a few hours per month on it, your risk might be much lower. On the other hand if you spend many hours every week, your risk might be higher, but you can also invest in currencies.

4. Define your investment objectives

As soon as you have figured out what your kind of investor profile is and you have managed your finances well, it is time to define your investment objectives. Because without clear defined objectives and goals you're basically just a ship without a steering wheel. You need to know where you want to go and do everything you can to reach that goal. If not then you might make poor decisions that could make you lose your money because it is solely based on luck. But you can't bet on luck alone to become successful in the stock market. With setting the right objectives you will keep yourself focused and wont make decisions lightly and know how to pull back when you need to set new goals with new investments.

5. Don't invest all your assets

It might come as a no-brainer, but it is highly advised that you do not invest all of your assets right away. Even if you decide to have a high risk investment profile, it is still advised to have a monthly fixed amount invested into your objectives. This way you can steadily work toward your goals and wont throw yourself in financial chaos. Think in the long term here and know patience. 

6. Invest through recognized exchange platforms

The only way you want to invest in the stock market is through authorized exchange platforms that buy and sell shares from brokerage firms. So in order to invest you have to open an account through one of those exchanges. There are alot of exchanges online nowadays, but please do your research before investing your money through them. Be sure to check if they have the right qualifications granted nationally and internationally. 

7. Diversify

What you most likely don't want to do is to invest all your money on the same horse. In order to reduce risks and increase the chances of success it is advised to create a diverse portfolio of all kinds of stocks. This could be stocks from old players, like gold and oil. Or something totally new, like new technology. Just imagine you would have invested in Tesla when they first came along. Also you can invest in different sectors, if one sector might crash, you wouldn't lose all your investments right away. Or you can invest in foreign companies, governments debt or similar. It's up to you, but the main lesson here is that diversifying is key.

Tip, you can invest in the top 500 and know that most of these stocks are fairly good investments.

8. Learn when to buy and when to sell

One of the most difficult decisions you have to make after buying your stock is to keep it or sell it. While it is always recommended to keep your stocks for the longer term. You might want to sell your stocks within 1 or 2 weeks after buying. But this decision comes at a higher risk and should be well thought out. Even if you know that a stock is going up for weeks in a row, there is no guarantee that it still goes up next week. Yes there are some analytics tools that can try to predict what the future price might be, and they can help you make the decision where to buy or sell, trusting 100% on them is not advised.

9. Continuously analyze the behavior of your investments

After you have done the investments, and you have a reasonable investment plan setup through your budget. It is important to keep analyzing your investments and keep track of them. You should keep a journal of when you bought them and when you sold them, preferably give reasons why. If you keep a journal you can better understand your own habits and learn from your mistakes. Knowing your own risk tolerance will help you better understand your own decisions. Likewise, understanding the market and your own behavior can help you find more and better opportunities and get higher rewards for them.

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About the author:

Hello, my name is Ron Hoekstra and I am the founder of The Liberty OnDemand. I hope you like my content, and if you want to know more about me, please read more here or subscribe to my newsletter where I will keep you up to date with new posts and other useful content.

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