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How to Invest in Stocks for the Beginner

By Edited Feb 16, 2014 0 0

Investing your money in the stock market can be very scary, especially if you've never done it before. However, the more you know about the market the better prepared you'll be. This article will give you some advice on investing in the stock market.

You should figure out how much money you can afford to invest in the stock market. Make sure that you do not have a large amount of debt before you even think about investing. Unless your debt is on something like your mortgage, try paying off any debt (credit cards, loans) you have accumulated. Before you invest, make sure that the money is something you will not need for a while. People usually invest there money in stocks for a few years.

Figure out when you may need the money you are going to invest. Would you need it for a down payment for a house? Do you want to have it for your retirement? All of this should be taken into consideration before you invest your money. You can even think about investing your money for the short term as well as the long term.

You need to know how much risk you are willing to take in a stock. The more risk involved in a stock usually means the better it will perform in the long run. However, the risky stocks will fluctuate in earnings which can make any investor nervous for there money. Safe investments grow at a slow rate but involve little risk. For investment purposes, risky stocks can be used for long term money while having safer investments for the short term.

Think about whether you want to have a hands on or off approach in dealing with your stocks. Mutual fund investing is better for a hands off approach in the stock market. A mutual fund consists of bonds and stocks. Basically, you choose a fund and the managers will do the rest. Online trading is better for investors who want to be hands on. That means they are willing to check there stocks on a daily basis and trade them. Online companies like ETrade let you buy and sell individual stocks and mutual funds. There are fees for all of the trading and transactions but they are fairly cheap.

Remember to have a balance of short term and long term investments in your plan. You should also take a good look at your portfolio every few months to see if you need to make changes. The economy, businesses, stocks and your financial goals all fluctuate from time to time. Make sure you are always on top of everything.

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