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How to invest in the stock market with little money

If you are a beginner, familiarize yourself with stock investing basics before proceeding to invest in the stock market.

Investments are not only a way the elite consolidate their riches but a wealth-building tool the average worker can employ quite easily. An encyclopedic knowledge of finance isn’t even necessary if you possess common sense and patience. Investors typically lose in the market in only one of three ways, those being panic, inattention to transaction costs, and failing to account for unknowns.

First let me tell you the fact that your friend has deliberately revealed half the truth! How?  People conceal their mistakes that they make in the stock market of losing money.  Let me further drive home the point that you can’t make money consistently by trading daily in the stock market or one fat buck overnight.  You will be losing more than what you make by trading often.  The odds are more against you if you want to successfully trade and take home money daily.  In short, you cannot win the daily bread and butter in the stock market or one fat buck in a single shot! Never heed to anybody.  You should be able to justify yourself the price for which you bought a scrip. Of course, the money used to buy here has not to be borrowed or cash kept aside for some other purpose.

We’re not here to tell you where to invest your money. We won’t lay out a handful of stocks on a “buy” list. But what we can tell you is how you can invest your money — the mechanics of investing small, large, and medium amounts of cash. We can even help you choose a broker.

Let’s start with $20. We’re going to assume that you’ve already paid off any high-interest debt and that you have some money stashed in a safe place (like a savings or money market account) that you can get to quickly in case of an emergency expense. Now you find yourself with a little extra dough, and you want to begin investing for your future.

Is it even worth it to invest such a pittance?

Heck yeah it is! One of the best ways to invest small amounts of money cheaply is through Dividend Reinvestment Plans (DRPs), also known as Drips. They and their cousins, Direct Stock Purchase Plans (DSPs), allow you to bypass brokers (and their commissions) by buying stock directly from the companies or their agents.

More than 1,000 major corporations offer these types of stock plans, many of them free, or with fees low enough to make it worthwhile to invest as little as $20 or $30 at a time. Drips are ideal for those who are starting out with small amounts to invest and want to make frequent purchases (dollar-cost averaging). Once you’re in the plan, you can set up an automatic payment plan, and you don’t even have to buy a full share each time you make a contribution.

How to invest couple of hundreds dollars?

Once you’re up to $600, your investment options open up a bit more. You can still buy an index fund, and now you’ll have your pick of fund companies that require higher initial investments. This freedom will enable you to shop around for a fund with the lowest expense ratio. You should also seriously consider opening a discount brokerage account.

Think buying stocks as buying fractions of businesses that have strong fundamentals whenever they are sold cheap with little or whatever spare cash you have.  Analyze the financials of
the business that you think is attractive. Be it a bull market or bear market, be it a black Monday or a dark Friday, an election year or a non-election year, if you find an attractive business selling at a discount price, never have a second thought.  Buy whatever quantity you can and forget it.  Forget about the humbugs of technical analysis and historical prices.

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29. Jan, 2012
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How to invest in stocks for beginners

How would it feel if you could make a lot of money investing in the stock market, all by yourself? You don’t have to depend on rumors for the hottest stocks or waiting calls from brokers for the ‘insider tips’.

Even better, what if you can beat the market just like your fund managers did? (well, if they did beat the market)

After all, expert investors do start as a beginner before. But how to invest in stock market? Welcome to the world of stock investment.

If you are not sure how to invest money and want to invest to get ahead, don’t start investing until you know some rules of the road. Few things are black and white in the investing world, but you can avoid major mistakes when you invest by following some simple guidelines.

This are some basic tips and tricks on How to invest in stocks for beginners.

Define your investing objectives

Open your eyes and heed the real advice of those that have come before you. Explore our web site, investigate your investments and define your goals and objectives.

Don’t learn trading with real money

Do NOT open a brokerage account and start trading with real money before spending time learning at least some of the basics involved. After you learn some of the basics and feel you are ready to start trading with real money, “DON’T”. Keep learning and wait. Make sure you find a learning resource that you are comfortable with and trust, and that you can ask questions and get answers. Once you have made at least 10 or more successful trades and feel comfortable with your trading plan, consider taking off the training wheels and open a brokerage account.

Do not play… Investing is not a Joke!

You must treat investing as a real job and not as an easy “game” or a “joke.” You must start investing instead of just “playing” and make money fast and now. The final safe investing decisions and the money will be yours and only yours. Don’t get distracted when investing money and don’t try to time the markets.

Practice makes perfect.

In the investment business, paper trading is how we all start. Pick a couple of companies, make a note of their price, the date, the reason why you want to buy them and then start following the stock.

As time passes, the hunch or assessment which made the stock such a great prospect will play out. Was it a good or bad decision? Would buying the stock ‘for real’ have made a profit or a loss?

Increase your Capital Gradually

For those who wish to know how to invest in stocks, investing a small amount initially and then increasing your total investments gradually would be the best suggestion. If you enter the markets with a big amount and make initial losses, then it might reduce your confidence drastically. Instead, slow and steady investing will help gain expertise in the same.

Diversify your Investment

Investing all your money into any one sector or stock can be dangerous, especially when the broader markets are trading in a weak zone. So, if you invest some money in multiple sectors, the chances of suffering from heavy losses minimize greatly. You can choose stocks from the most profitable sectors such as banking, financial services, information technology and automobiles. You can choose stocks from each sector to get dividends as well as benefit of stock price appreciation.

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29. Jan, 2012