Investing in shares of companies is not the easiest, but quite reliable way to earn. Of course, to successfully participate in trading on the stock markets requires some knowledge, because you risk your own money. Igor Mazepa, associate director at consultancy Concorde Capital, added:
however, you can earn money without having a Harvard business school diploma. In this article you will learn how to invest in shares of companies correctly.
How to invest in stocks
It is worth noting that the investment is not suitable for those who are looking for a quick income. Of course, there are very successful investments that bring instant profit, but it is rather an exception to the rule. Usually years pass between the investment and the opportunity to make a good profit. Here are 5 key points to consider before entering the stock market.
Decide on your investment style
In fact, there are only two styles of investing. In the first case, you have a serious initial capital, which is not afraid to risk. You also have an idea of how the securities market works and are able to independently assess the prospects of shares of companies. In the second case, you want to try your hand, but do not have the appropriate experience.
In the first case, you just need to choose a broker and start trading. If you belong to the second category, then you should first use the services of a Robo-consultant. This feature provides most of the major brokers.
Open an account
Of course, the first step is to open an investment account, which will allow you to become a full-fledged player in the securities market. If you are confident in your own abilities, then open a regular brokerage account. For those who doubt, there are special accounts that are fully (or partially) managed by Robo-consultants.
A brokerage account makes you a full-fledged trader, but imposes additional duties. For example, you will have to deal with taxes yourself, which is quite problematic for untrained people. On the other hand, there are accounts managed by Robo-consultants. They also allow you to invest in stocks, but do not require the owner to perform analytical and settlement work.
Find out the difference between shares and mutual funds
After opening an account in front of you will open two ways. You must choose between investing in a particular company’s shares and investing in a mutual Fund.
Individual shares. You can buy shares of a particular company, in the future success of which there is no doubt. This option is suitable for beginners, because the analysis is reduced to the study of the situation of only one player.
Mutual fund. Means the acquisition of a portfolio of shares of different companies. Thus, you become the owner of small parts of several players, so you have to analyze large amounts of information about the companies you have invested in. Of course, this requires certain knowledge and skills. On the other hand, in this case, the risk of losing everything is minimized.
Decide on your budget
You should start with small amounts. Try to start to invest a few thousand dollars. This is a substantial amount that will not allow you to treat the investment lightly. On the other hand, if you fail, you won’t lose too much. If you plan to invest really big money, then give preference to mutual funds. In the shares of individual companies should not invest more than 10% of the budget, because the risk of failure is high enough.
The securities market is a place where the struggle between ingenious strategies does not stop, but most successful investors managed to get rich initially without being financial geniuses, tell us Igor Mazepa. So just rely on your knowledge and intuition. Probably, you will be able to join the company of the above-mentioned billionaires.
3 reasons to start investing in stocks
Now you know how to invest in stocks, but probably still doubt the feasibility of this venture. First of all, investments are necessary, because absolutely all world currencies depreciate. On the other hand, shares of promising companies may rise significantly over time. Here are 3 good reasons why you should not be afraid of investing in stocks.