Investing money in stocks can be a daunting task, especially for the average person who doesn’t have a background in finances. Grasping an understanding of how to invest and what all of those terms mean can be overwhelming, but because of this many people haven’t taken the chance to build their wealth in the long run. So, in order to provide some comfort and knowledge, here are some tips on how to do this whole investing thing:
1. Don’t invest money you will need soon.
The stock market is unpredictable, therefore it’s unrealistic to assume that you’re going to start earning large profits in a short period of time. Start investing with the idea that you’re putting away money for a few years, and not money that you’ll need to pay bills. Start investing with a small amount because if you sell your stock shares for less than you bought them, you'll lose money.
2. Don’t purchase a stock just because someone else tells you to.
One person’s stock recommendation may be perfect for their portfolio but a risky investment for yours. Do your own research about a company that you may be interested in and decide for yourself to invest. Peer pressure about the next big thing may be tantalizing, but it is important to take into account what is best for you. A good rule of thumb is: don’t invest stock in a company if you cannot give reason as to what exactly that company does, or what you like about it.
3. Think about how a company will impact society as a future.
Pay attention to the industries people are discussing and the services that are being provided, and how it may impact one’s life. Consider the areas you would like society to improve upon. One of the best ways is to read the news. There are newsletters you can sign up to receive with Robinhood that send daily articles on the market, and updates.
4. Curate a portfolio that reflects your interests and values.
In order to feel less intimidated by investing, it might be a good idea to channel your passions through your portfolio. Invest stock in companies that align with your personal values and interests. A diverse portfolio is a safe approach to investing and allows for the most growth.
5. Give your investments a chance to grow.
Don’t get caught up in the small potatoes when it comes to buying stocks. Some people will find a stock they just bought drops by a few cents and consider selling to make at least a bit of profit, but don’t feel like you aren’t moving fast enough. The market is very emotionally driven, the market will hit its highs and lows. Over time the market generally trends upwards which is why holding onto your investments long-term is a fruitful strategy. You will likely see gains, so have a little patience.
6. You are investing in the future, not throwing away money.
Even though money is leaving your account when you buy a share of a company, think of it as adding money to future investments. It also helps to budget out a specific amount to put towards stocks each month and may even help you with savings in the long run!