Beginners’ Guide to Making Money through Stocks and Shares?

Does Dollar Cost Averaging Really Work?

With advances in technology, more people are making the most of profit-generating tools for online investment opportunities. Investing in stocks and shares can be a lucrative venture, but there’s no doubt it also has its risks. Making money through stocks can be lucrative.

Buying stocks essentially entails purchasing a percentage of a company’s equity. The bigger the share, the bigger the reward. However, with every investment comes the risk of loss. This article is for you if you are a newbie looking to make some money from home, but aren’t sure where to start.

Before you even think of becoming an investor, make sure to shortlist fast and secure online payment methods. It is extremely important to use reliable payment gateways that are compatible with the stock exchange portal you use. Don’t forget to check that the exchange is registered and legally operating in your country.

Gets the Basics Right

You should first determine what type of investor you want to be before investing in stocks. You need to decide if you want to take chances or play it safe. You should also determine how many hours each day you are willing to devote to this endeavor. All of these factors will influence the type of investment plan that is right for you.

The next step is to open a brokerage account – this can also be done from the comfort of your own home with online brokers. After making an investment account, you can safely and legally invest in a range of stocks.

Managing the Investment Account

You need to decide whether you are confident enough to choose your stocks and how much to invest in them, or if you would like an expert to handle things for you. As a beginner, it is always best to get a little extra help. Brokerage firms typically provide advisory services where you can discuss your future goals and get advice on the best course of action.

Employer Investment Plan

One of the most popular strategies is to invest a small amount of money each day. This method is not heavy on the pocket and also keeps you focused on your long-term goals. This is how employment investment plans work.

Through this type of investment plan, a small amount from your paycheck is deducted every month for relatively stable, long-term profits. You can choose to start with a small amount, like 1% of your salary each month, and then increase the amount as your salary grows and you have more money to spare.

Roadmap to Successful Investments

Stocks, broadly speaking, come in one of two types: highly volatile and less volatile. Stocks with lower volatility have a beta value of less than 1.0. With highly volatile stocks, you have the chance of earning a higher profit in less time, but it also carries a higher risk of losing money.

High-growth stocks may seem attractive but they can be a gamble. High-growth stocks tend to be highly volatile and you have a higher chance of incurring losses.

Other high-return options include:

Money market funds:  This is where funds are pooled together from many investors for a common goal. However, depending on the type of funds, the investor will have to pay a variety of fees, including the price for opening an account and the management expense ratio (MER).

However, for beginners, money market funds are generally a good choice because the fee charged is the same regardless of the amount you are investing. So, all you need to do is meet the minimum criteria for creating an account and you are good to go.

Certificates of deposit (CDs): Since you deposit a set amount of money for a set length of time, a certificate of deposit (CD) is sometimes also known as a savings account. When you retrieve money from the bank, you get not only the original deposit amount, but also the interest.

Understanding the Stock Market Dynamics

With stock market simulators, it’s now easier than ever to grasp the stock market’s ever-changing dynamics. These simulators allow you to invest virtual money in a variety of companies to get a better understanding of how the stock market operates.

Investors practice trading with fake money and learn trading tactics. Some stock market stimulators even allow you to compete with other investors for stocks which also helps you prepare for entering the real market.

Asset Allocation

Asset allocation plays a crucial role in the outcome of your investment. You should include the minimum amount of risk to generate profits that meet your goals. It’s also important to diversify the type of investments you make. In simple terms, it’s never a good idea put all your eggs in one basket.

No matter how much research you do, there is always a chance of the company you are investing in incurring heavy losses or even going bankrupt. A smart move would be to invest in multiple types of assets. However, for beginners, it’s not a good idea to invest in companies you are not sure of. Stick to companies you know will generate profits.

You don’t need a lot of money to invest in stocks. However, you do need to be smart about what type of stocks you want to invest in. Once you select the right investment plan, things will get a lot easier. This can only be done by doing proper homework and comparing the rates of different brokers. Remember, practice makes perfect!

Leave a Comment