Many people start their life as a stock investor the wrong way. It happened to me. Everyone I knew were making lots of money in the market. I thought it was so easy to make money just by listening to market tips. But the truth will always reveal itself when the market correct. It become clear that the only thing easy is how easily your money can disappear there.
These are wrong ways to start your journey as a stock investor. It is not too late to change. To start off on a sound footing you will need to have some tried and tested techniques before participating in the stock market.
It could be bit technical for some people to understand, so let’s break it down.
Master These 10 Techniques Before Becoming A Stock Investor.
1) Education
Most people need a proper education before they can find success in whatever they do. The same with the stock market. If you are looking to become a stock investor then the first step is looking for a stock investing education.
Learn about how to analyse a company businesses and calculate the real worth of a business. Have a proper education before starting your stock investor journey.
2) What Stocks To Buy?
There are thousands of stocks listed in the stock market. The most popular stocks are dividend stocks, growth stocks blue chips and penny stocks. If you are a stock investor you will look for stocks that have potential for capital gains (rising share prices) and giving good dividends.
The stocks can only do that if they have a good business and continue to generate good profits every year. On the other hand, penny stocks can offer massive capital gains (much more than good stocks) but these gains are not sustainable because they are due to speculation. What stocks to buy? The choice is yours.
3) How Much Capital To Invest?
Decide early on how much capital to put into stock investing. If you have $50k savings you should not be putting all of the $50k in the stock market.
Keep at least 30%-40% for personal emergencies and some cash into an “Opportunity Fund” if the market corrects. Don’t put everything in the stock market!
And above all, don’t use margin finance and loans to invest in the stock market. It can hurt your finances badly if the market decide to drop.
4) Is It The Right Time To Start Investing?
Although many people think that long-term investors need not time the market won’t it be nice if you started when the market is at a low point rather than at all-time high? What cycle is the market right now? Have you heard of the Malaysia stock market investing cycle? This phenomenon comes around every 10 years in Malaysia. Knowing this beforehand could make you a richer stock investor.
5) Spare Time
Having enough spare time is a critical element in stock investing. If you have limited spare time then you have to be a passive investor and cannot be an active or aggressive participant in the stock market.
It is because spare time is needed to conduct many activities such as stock research, read up on news, look at stock charts, monitor stock prices and ongoing learning to upgrade your skills and knowledge.
Stock investing is a serious business where you are learning something new everyday. Many stock investors ignore this to their peril.
6) Good Resources
Good resources refer to the guidance and information you will need to keep your stock investing up to track. Is it a stock market blog, money magazines, authoritative stock market websites or a stock market group you can join? The purpose is to gain reputable news and in-depth knowledge about the stock market.
7) Online Account
A good online account helps an investor make better investing decisions. It should have adequate online security, offer low trading commissions and tools to help the stock investor to make good decisions on purchasing and selling stocks. Choose an online account wisely because it is an asset to a stock investor.
8) Age Factor
Are you 30 or 50 years of age? A 30 something person have a different set of investing strategies compared to a 50 year old looking to accumulate enough money for retirement later.
Unfortunately you can see there are many people in their 50 investing in the stock market like a 30 year old. They aggressively purchase speculative stocks with their savings hoping for a big gain.
It is the wrong way to investing as stock investor in their 50 should NOT be speculating but instead using passive low risk investing strategies to increase their incomes.
9) Paper Trading
Many people skipped this process called the “testing period” and regret it later. It is a time where you go LIVE and test out your investing strategies to see if they work in real life or not. In USA, they call this “paper trading” which the account is loaded with virtual money.
In Malaysia, you don’t have it yet. But you can always make a trade on paper and keep track of this. If you are not making money investing in a virtual account, there is a big chance you will also lose money in a real trading account.
10) Knowing Yourself
Many people who failed say that they failed because they could NOT keep their emotions in check. In the stock market your true character will reveal itself, trust me. If you are greedy in the stock market, it is because you are greedy in your real life.
Learn more about yourself before you start investing. Learn all your strengths and weaknesses and how to overcome them. In the stock market you are your own demons. Knowing yourself beforehand will make you a better stock investor later.
Conclusion
Many stock investors start their investing journey the wrong way. They end up losing badly in the stock market and they blame the market for being a scam.
However, it is not too late to change all the wrong ways. Things can easily be fixed with the proper training and education. Mastering some tried and tested techniques before you start investing can help you to the right footings to investing success later.
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