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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
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What is Income Investing?

Income investing is quickly becoming one of the easiest and straight forward methods that companies use to pick stocks so that a steady stream of stable income can be created. Most of the time when investors consider options for steady income fixed income securities like bonds come to mind, however, if stocks are chosen that pay out a solid dividend then the stock market can also become an easy way to create a steady income. Of course, the trick is identifying the types of stocks that offer a steady income.

For the most part, income investors focus their efforts on established firms that have a lengthy past that have obtained success at a level in which they will not grow or expand any farther. This is due to the fact that these companies do not reinvest their earnings into the company for further expansion, but instead pay out their earnings as dividends so that shareholders always receive a return. This happens most often in industries that are no longer expanding such as utility companies and other companies that have already proved they are capable of producing a steady dividend.

However, there is much more to income investing than simply choosing to invest in companies that pay out high dividends, because the most important component to consider to determine if they are a stable source of income is the dividend yield. This can be calculated taking the annual dividend yield and dividing it by its share by price. Once you complete this calculation you will see the actual return that the stock owner receives. After you determine the average dividend yield of the company you can then determine the yield that you will receive as a stockholder which in the end is the most important figure to have at your disposal.

Outside of this factor, you also will need to look at the dividend yield alongside the past dividend policy of the company. This can help an income investor determine if the company they are looking at will continue to produce the same amount of dividends. It is very important to ascertain if the company will be able to continue to produce high shares or start to slowly decrease since once you purchase your sticks you can lose money if you are not carefully. A talented income investor that is properly educated will continue to check the dividend yield against the past dividend policy in order to continually guarantee that their investment is sound.

One sure sign that a company may be about to fall in dividends is if they have increased their dividend since a large increase may not be sustainable long term and may be a sign of over-optimism. By carefully analyzing the decision of the company and its investment patterns you can make a safe decision that takes into account if your investment is still safe and solid. Of course, before you worry about how safe your investment is, you first need to find a top dividend stock which is where careful research comes into play.

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07. Mar, 2011