Looking to invest in the stock market but have no idea where to begin? You’re not alone; investing in the stock market can be confusing and overwhelming, especially for first timers. People usually think investing in the market is like gambling: the house, like the market, will always win and you’ll eventually lose money. Or they know they should invest for the long term but don’t know how to start. So how does one navigate the stock market?
Are you looking for long term investments to help save for retirement or are your goals more in line with buying a house? If you have multiple financial goals, prioritize according to their level of importance If your list of goals is lengthy, focus on the top three. These goals should reflect what is important to you and your financial future. Additionally, set a time frame for each top goal. These particular goals and time frame will create a foundation for how you will navigate the market. Essentially, your investment decisions will be led by these goals.
What is your risk tolerance? Spend time thinking about and evaluating your true feelings regarding how high your risk tolerance is. You don’t want to invest in something that far exceeds your comfort zone. If you’re nervous about even losing a dollar or two, the stock market probably isn’t for you. Tucking your money away in a lower risk option is most likely your best bet. However, if you’re comfortable with a possible 10% loss, then the market may be for you.
Generally speaking, if you are looking to invest a small amount of money look to companies who don’t require high minimums. Many investment firms require at least a $3,000 minimum just to get started. Certain firms such as Scottrade or E*TRADE Securities cater to the first time investor, providing easy trading tools and low minimums. These firms make it easy to jump into the stock market world.
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