If you are a new investor and are looking to buy stocks, this article is a good starting place for your research. You should always learn as much as you can before investing your money into anything.
You might think that investing in the stock market is only for people with a lot of money to spare or someone that has unusually good luck. Nothing could be further from the truth. Just about anybody can learn how to invest in the stock market. But it is also advised to do your research and learn as much as you can so that most of your investments make money instead of losing it.
Many people who invest in stocks make the mistake of relying too strongly on past performance when deciding which stocks to purchase. While prior performance is a very good indicator of how a stock will perform in the future. You should make certain to investigate what the future plans of the company are. It is important to consider how they plan to increase revenue and profits, along with what they plan to do to overcome whatever challenges that they currently face.
Consider investing in index mutual funds. These funds buy and hold the stocks of the companies that comprise one of the major stock indices. These funds allow you the chance to capitalize on the returns of the overall stock market without excessive fees or sector risk. These funds also require very little maintenance or attention.
For some fun in investing in stocks, take a look at penny stocks. The term applies not just to stocks worth pennies, but most stocks with values less than a few dollars. Since these stocks have a very low price per share, even a movement of a dollar or two can yield major dividends. This can be a low cost way of learning the markets.
Remember to re-balance your portfolio. Re-balancing can be done on a quarterly or annual basis. Monthly re-balancing is not usually recommended. By periodically re-balancing your portfolio, you can not only weed out losses, but also make sure that yields from winners are reinvested in other sectors that will eventually hit their growth phase.
If you are knowledgeable enough to do your own research, you may want to look into getting an online broker. The trade fees and commissions of online brokers are cheaper than both full service and discount brokers, but you have to do your own research into companies you are interested in investing in. You want to spend the least amount of money in order to make money, and many investors choose to only trade online.
If you want to invest but are unsure of what to buy, use a full service broker. These firms have staff with expertise in the field and highly current knowledge of the markets. While these brokers charge the most, their advice and recommended picks are usually pretty safe bets. Many individuals working at these brokers are they themselves making a lot of money in the stock market and can make you some too, for a fee.
Use rating systems cautiously in a bear market. These rating systems may be untrustworthy during this time, and you could wind up losing a lot of money if you rely solely on them. Instead of using rating systems as a guide, use them as a means of secondary information only, and factor the rating into your decisions with a grain of salt.
As you can see, there is a lot more to stock market investments than having good luck. Making money through stock market investments requires time, forethought and intelligent planning. The tips for a new investor you just read can help you get started investing. For more tips, please read our Tips for How to Start Investing in the Stock Market article.