Financial Freedom Insider


How to Start Investing

How to Start Investing
November 02
13:01 2015

While being absurdly wealthy definitely helps investing, the stock market is not just for rich people. Despite the risk associated, investing is one of the best ways for people to create wealth and become financially independent.

Called the snowball effect, investing small amounts continuously can eventually create gradual gains that will ultimately lead to major growth in wealth. However, to accomplish such growth, you must implement proper strategy and stay patient, disciplined, and diligent. Here are some tips for making small but smart investments.

First off, anyone considering entering the stock market needs to make sure they understand the risks. If we focus on the worst case scenario example, that the stocks you invested in completely tank, would such an event put you\at serious risk? If the answer is yes, you probably should not be investing. Ensure you have around 3 to 6 months of your income readily available in a saving account, which will ensure that if you do need quick money, you won’t have to rely on selling your stocks for assistance.

Once you are ready to start, there are a few strategies you should use. Most importantly, avoid concentration in a few stocks. Barring a complete market recession, a diversified portfolio, having your money spread out over many different stocks, will be far less risky than focusing on one specific area of the market.

For example, if the price of oil falls and your oil stock drops by 20%, more people might travel for vacations due to the cheapness of fuel. If you also had money in hotel stocks, you would not experience such a great hit due to  your decreased oil stocks.

Take the time to research. If you were to only focus on charts and graphs, you probably would have missed out on the biggest investments of the last 20 years. Getting in on the ground floor is often the way investors make their fortunes. Studying market trends is important, but being able to predict upcoming societal needs will ultimately decide your success.

Last but certainly not least, you need to be patient. While this sounds simple, patience is the number-one obstacle that prevents investors from seeing the effects of good investments. The stock market is volatile, and many people cut and run at the first sign of decline. Understanding that volatility is part of the game is vital to your success.

If you diversify, take the time research and remember not to cut and run, you should be able to grow even a small amount of money into a meaningful quantity. Start off slow, with a small amount of money invested, and learn the ropes of investing. Before you know it, you could be the next Wolf of Wall Street.


About Author

Sean Gibbons

Sean Gibbons

Related Articles