How to Start Trading in Stocks
For some, buying and selling stocks seems like sailing a boat on unchartered seas full of sharks. They are always afraid to start trading. Others see it as a way to easily get rich from the lifestyles they have been able to see stock traders amass great wealth over a short time. For other people, the markets are simply a land of opportunity, a game of sorts where those who play well are rewarded. Regardless of how you perceive stock trading, one thing is for sure- you will need to start trading to make money. So here are tips to help you start investing today.
- Eliminate all high-interest Debt
Ensure that you have paid off all your loans or charges that are of high interest. You do not want to get into the stock market with debts weighing you down as this could contribute to making rash financial decisions. Debts that are of high interest could include, for example, debts on credit cards. Beginning your investments without debts not only gives you an additional sense of safety, but it also allows you to simply not chase after money for the purpose of paying off the debts. Further, have some extra capital stashed away that will be able to keep you in the market in case you make too many losses. If your employer offers a retirements or investment plan, be sure to contribute to it as well.
- Choose A Broker
Once your accounts are in order, it is time to get a broker. Online brokers are preferable for most individuals. This is because they charge low fees to maintain your account, clearly explain the commissions they charge and have very low minimums on the amount of money you can start investing with. Further, you can always invest from home or while traveling with the use of an online broker. Do your research and find a broker with an excellent history of service.
- Purchase an Index Fund
An index fund might not seem appealing to every individual. However, having it as your first purchase on your new account with the broker will help you get exposed to the market more broadly. Additionally, an index fund has a lower portfolio turnover which means it has lower transaction costs.
- Set Up Your Timeline
Learning what times you’ll be trading and remaining consistent at these times is important. This is because it will give you a sense of regularity in trading stocks and also ensure you do not rush into the markets all the time. It is likely that you will make lesser losses with a more structured and consistent timeline in your trading. You will be able to do your market research beforehand, and with time, informed trading will become a habit.
- Pick Your First Stock And Buy It
It doesn’t have to be a well-known company. The stock you start trading on will largely depend on your personality and your timeline. Preferably, find a company you have some history with or experience often. Do some background research on the company and buy the stock. The stock does not absolutely have to go at a profit. The point is beginning, and more so learning from your first experience.
Practicing these tips is going to make your beginning to investment a safe trip home. Remember, the best time to plant a tree was 20 years ago, the next best time is now. Start on with these tips today.