Investing for Beginners - The Safest Way to Invest in Stocks
A lot of people have been looking at investing, either because they have been hearing about it from people and financial advisers, or maybe from a random guy on YouTube or Twitter. Everyone wants to invest and make money out of it but let me make something clear here, if you are thinking of putting your money into stocks to buy for a short period of time, then you are not investing rather you are trading. Let me also sound this warning, there is no guarantee that you will make profit when you invest in stocks, you might lose part or all of your money while doing this.
How do I invest in stocks safely?
There are a few things that determine that you are going to make profit on the stock market and this things includes how long you are willing to invest, the amount you are investing, the average percentage of returns on investment and dividend.
Picking stocks isn’t something you will want to do as a novice or amateur who wants to go into investing in the stock market and also, you do not need thousand to start investing in the stock market. If you have a job that pays you well and you have about $100 you are willing to invest, then you can start with that but picking stocks will not be the right choice for you because it requires a lot of time, energy and resources to find good companies which are not overvalued to invest in. Furthermore, as a beginner you are investing as well as people with millions and billions in their account. Picking a stock which you have spent time to find and then seeing that at the end of two years, it is down by 20% due to lack of interest by customers or bad management, then your zeal goes down as well your money goes into the drain. Also, you might be hearing a buzz about a company whose stocks are soaring high and it looks like the stock for the future and you intend to buy such stocks, you might end up losing your money because when the news are already on the television, radio and on social media, then you have missed out of the good deal.
It is advisable to invest in an Exchange-traded fund (ETF) as this comprises of stocks, bonds, and commodities that are doing well, thereby putting your risk on the low side. You can also decide to make your investment specific like checking for technology ETFs and other ones but it is advisable to invest in a general ETF. S&P 500s has an average return of 10% annually.
When investing like this, I prefer the compound investing method where if you have $100 every month to spare, then you invest this on a monthly basis, and you invest the profit as well. By doing so, you are growing your portfolio on the long run with both in capital and the profit. Investing for me is as average period of 5 years, anything less wouldn’t yield more profit.
Please contact a financial advisor before investing your money anywhere, this post is for educational and recreational purposes and should be seen as such.
