Investing in stocks can be an interesting and lucrative way to increase your assets. However, if you’ve never done so before, getting started can seem as difficult as learning an entirely new language. The best approach to investing is to take it slow. This allows you to learn as you go without taking too many risks.
Day Trading
If you want to get into day trading, your first step should be to learn as much as you can about the stock market first. The strategy when it comes to day trading is quite a bit different from regular stock investing. Conventional wisdom says to play the long game, but for day trading, you are constantly juggling stocks, buying, and selling. You may even want to work with penny stocks, which are a particularly volatile and risky type of investment, but which can also mean big returns, especially since you can afford to purchase many shares. To get some guidance, you can review a daily watch list and follow alerts that point you in the right direction of the best stocks.
Choose Your Method
If day trading sounds a little too stressful to you, then you can use a more conventional approach. Your first step is to decide how hands-on you want to be. Once you have set up a brokerage account, a roboadvisor can help you make the best choices based on your goals and other factors. However, you may want to choose your portfolio yourself. If this is the case, you’ll need to do more research.
Understanding the Markets
Whatever approach you choose, it’s a good idea to do some reading to better understand where your money is going and what’s happening to it. If you’re going the roboadvisor route, you don’t have to do this as intensely, but it’s still a good idea to try to read some articles about stock investing from time to time, which will still put you ahead of many others. If you’re going to be more hands on, it’s a good idea to read a book or two and commit to reading at least one or more articles daily on the topic.
Understanding Yourself
What are your goals? How old are you? Have you already learned how budgeting can make your life better and improve financial literacy? How much risk tolerance do you have? Younger people have more time to recover from losses than older adults so they may be more comfortable with more volatile choices. On the other hand, you might be a risk-averse younger person or an older person who loves the thrill of the markets and has money to spare. Answering these questions will be important in deciding how you will proceed.
Choose Your Type
You can either purchase individual shares in companies or you can purchase some type of mutual or exchange-traded funds. Mutual funds or ETFs allow you to get many different types of stocks and may spread out your risk more. However, one reason a person might prefer to buy individual shares is that they have the potential to show a huge rise. This is not likely but it does happen on occasion.
