A lot of people know about stocks and its perks, but not everyone knows how to invest in the stock market. If you are a neophyte investor, know that stocks is a great option to help you generate another stream of income aside from your salary or business because it requires less maintenance. Here is a step-by-step guide to help you get started:
Read About Stock Jargons
The most basic thing to do before trying something new is knowing what you’ll get yourself into. Before investing in the stock market, knowing its jargons will help you decide what to do with your money and know how much risk you are in. Here are some basic ones to help you get started:
- Bear Market signifies a downward trend or a time where stock prices plummet. It is when stock selling is encouraged. It is the opposite of a Bull Market where prices are expected to rise, and therefore, buying is encouraged. These two terms are metaphors from how these animals attack — a bear attacks by swiping its paws downward while a bull propels its horns upward.
- A Broker is a registered representative who buys and sells stocks for you in exchange of a commission. They are usually employed under a brokerage firm and analyzes the market trends.
- A Dividend is the payment of the corporation to its shareholders. These are usually Cash Dividends but they can also opt to give out Stock Dividends which can be in the form of additional shares, rather than cash if they are short in supply.
Choose Your Brokerage Firm
You cannot trade without a brokerage firm because they serve as the mediators between the corporations and traders. Hence, choosing a brokerage firm which understands your long term goal and researches marketing trends is crucial. However, as an investor, do your due diligence and know the firm’s legitimacy and credentials. It is important to scrutinize them because you are investing hard-earned money, after all.
Once you’ve done your research and determined the brokerage firm which best represents your ideals, the next step is to fill out their new account application online. Then, the broker will collect confidential information such as your SSN, driver’s license, employment status, assets and goals.
Set a Budget
“Do not save what is left after spending, but spend what is left after saving” is Warren Buffet’s famous words and best finance advice because you cannot invest if you lack the capital. With his frugality, his net worth is almost $88B in 2019, and is among the top 3 richest people in the world. With this mantra and enough research, you can earn as much if you know which companies to invest in.
All millionaires started with a small investment but they all went a long way because they knew their investments’ corresponding risks and returns. Read up on stock investment to know about the strategies you can apply in order to earn as much as you want and be able to attain your investment goals.
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