Nothing is quite as intimidating as the stock market if you’ve never paid much attention to it. It is full of slang and complex vocabulary that can seem foreign to anyone who didn’t attend business school, and the people who trade there deal in shorthand and assumption that leaves the newbie in a bit of a fog. Not to worry, though, since there are libraries and bookstores full of information about the stock market from an informational, rather than an investment-advice point of view. And there’s always the internet – if you want to know something about the stock market, just type it into a search engine for what will most certainly be millions of answers.
Look Before You Leap
But therein is the risk: some people are impatient to get their feet wet. They want to invest before they understand what they’re getting into. It’s a seductive prospect, based in the belief that the markets are so highly regulated that the beginner must certainly be protected, and of course there are stockbrokers who are paid to care for the uninitiated.
It’s like hospitals, right? I mean, you don’t have to have a medical degree to feel confident that you’ll be properly taken care of once admitted.
Well, if you’ve ever watched a television show about hospitals, that’s not entirely true. Nor is it true in the stock market.
The More You Know… The More You Know
A more basic truth is this: the greater your understanding of how the stock market works, what it all means and what your risks and rewards may be, the better off you’ll be. Both from a safety standpoint, and from an investment perspective.
Armed with a fundamental knowledge and the assistance of an investment advisor you trust, you may feel like it’s time to take the plunge. When that moment arrives, you have several options for getting your feet wet.
All Hail the Little Guy
First, the stock market itself welcomes smaller investors. Especially using online brokers, who allow you to buy as few shares of stock on any market, at any time, that you like. You even have control over pricing limits through “stop orders” and “limit orders”, versus “market orders” – those being some of the terms you should get your head around before you hit the BUY button.
Some investment brokerages have programs for small investors, which allow you to buy small amounts with the same level of research background and miniscule commissions. The mechanism is largely the same, but the comfort level – you don’t have to rub elbows with the big players – is the attraction here.
Your bank may have a program for small investors, as well. And when they do, you can link it to your online visibility of your other accounts to help you manage your money.
Even your employer may be able to help you get started. If they offer a 401K plan, for example, you may be able to buy into selected mutual funds – look it up if that term is still at arm’s length for you – without commissions at all.
The stock market is a lot like falling in love – scary, exciting, and no place for the timid or uninitiated. Make sure you know what you’re getting into, and then immerse yourself in the experience using a means, and to a degree, that is comfortable for where you are right now.
Your learning curve will be steep, both in the market and in love. Trust us on this one.
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Larry is the author of TradingStocks.com, a blog about stock and options trading strategies.
Article copyrighted by Larry, TradingStocks.com. Content published with author's permission.
