The Investing Start-up

Everyone loves to make money, it makes the world tick and there is nothing better than taking a punt on a small cap stock or landing the elusive 100 bagger!

What are some of the simple yet necessary things you need to know if you're going to begin to invest?

How much to invest.....

There is a fine line between investing and being broke.

It may be simple but never invest more than you can afford to lose, whether its stocks, real estate or precious metals there is always the risk of losing money.
Obviously the type of investment you're going to make will impact your initial investment, if your chasing income stocks and DRP's then you'll likely invest more than if you were taking a punt on a speculative resource stock.

Some investors work off of a Start over again (SOA) fund; this is the fund that would allow you to start over again in the event of a financial crisis or loss of a job.
General rule of thumb states that your SOA should be enough to survive 3 months without a wage, in my opinion this is the most important investment a new investor can make.

Ensure that you have this part of your portfolio sorted before beginning to risk money on more speculative investments. While your job may seem secure now it only takes one mental error for it all to unravel.

Once your SOA is healthy then you can afford to gamble on some more speculative stocks as well as have the peace of mind that you'll be ahead of the majority of people in the event of another financial crisis.

DYOR

Do your own research. You hear countless tales of people who jumped into a company on the word of someone else only to end up in the hole. Learn how to read charts and company info in order to determine whether an investment is right for you.

There are also countless stock market advisories that for a fee will do the research and stock picking for you, even with these it is prudent to know how to read between the lines and make your own decision. At the end of the day the advisory already has your money.....

There are also countless books and formulas that you can purchase in order to brush up on your financial evaluation skills.

Steer clear of taking the word of posters on financial websites and communities, majority of posters are only trying to help but you do get the occasional poster trying to push up the price of a stock, which can be a trap for new players.

Take mainstream media outlets with a grain of salt!

Understand trends

You need to be ahead of the curve when it comes to financial trends, this is obviously hard to do but if you can successfully pick the bottom of sectors then you'll make money regardless of the stocks you pick.

To do this you'll need to spend a lot of time researching and looking for news about the market that may not be significant by itself but when combined with other things indicate the beginning of a trend or market movement.

This could be as simple as a new government law that will course the exports of a particular resource to be limited. By itself it may not cause market to move but if a particular small cap stock has just hit a big deposit of that resource then all of a sudden you have the makings of the elusive 100 bagger.

Investing is tricky and for those that have been in the game for years these tips will be common knowledge but for those just starting out it may be the difference between investing and being broke.

 
By Sunday Trader

Copyrighted 2016. Content published with author's permission.

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