To the uninitiated, the stock market can seem like a scary place. There are hundreds of horror stories of investors losing their life savings. On the other hand, we hear great success stories of people who have made their fortune this way. It all depends how you invest. Some strategies are, of course, more risky than others. However, a long-term, sensible investment is one of the best things you can do with your money.
But, how do you decide where to put that all-important first investment? Where do you even begin with stock market trading? Naturally, your aim is to pick a stock that will rise in price, taking the value of your shares with it. This is easier said than done, but with a little know-how, you can find a lucrative stock. That’s what today’s post is all about. We’ll help you find that first stock and start building your portfolio.
Read Everything You Can!
First of all, do as much research as possible. The stock market is a complex mechanism that requires a deep understanding. Read about its history and how it works. Learn the intricacies and the language. Watch how certain stocks rise and fall and understand why. Keep up to date by reading the Wall Street Journal and follow investors online. Don’t invest until you’re confident.
Pick Something You Know
When it comes to investing in that first stock, choose an industry that you’re familiar with. It’s important to understand why stocks rise and fall. What factors are affecting its stock price? If you understand the industry you’re investing in, you’ll understand how prices are affected. Once you know that, it’s easier to spot the winning stocks. You can asses the surrounding factors and make informed choices.
Define Your Strategy
Your investment strategy will play a big part in what company you chose. For example, long term investors will be looking for a strong growth with reliable returns in ten years or so. For this, you’d look for a company that registers consistent, unfaltering slow growth on the market. If you want to trade regularly, ie sell when the price is high, buy when it’s low, you might look for a more volatile stock. That way you can steal a bargain and sell it on when it soars. Of course, this is the risky tactics of the stock market. Understand the dangers before you attempt this.
Research the Company Thoroughly
The stock price of a company’s shares vary according to its market presence. Before you invest, you should fully understand and believe in the company. Look for everything from its leadership quality to its sales to its security. Do they use security guard companies? Do they have a strong management team? All of these little things affect the potential stock price. Look back at their financial statements too. Keep an eye out for stability and consistency.
Once you have made your first investment, keep watching. Follow it closely and see what factors affect the price. Start small and use it as a test. Understand why it rises and why it falls. Use that information to make more investments. Don’t rush, take it slowly and you’ll soon see your investments rise and grow.