Getting started trading or investing stocks for a beginner can seem a big complicated or even scary. Stock market investing for beginners usually results in impatience, frustration and, unfortunately, loss of funds. Financial Brawn has put together 3 tips for stock market investing for beginners that will hopefully ease you into the market and help you learn while becoming profitable.
Stock Market Investing For Beginners
Don’t Invest funds you can’t afford to lose.
Before you begin investing, you should have an emergency fund setup with at least 3 months of income or 6 months of monthly expenses. This is a complete necessity. If you do not have enough money in an account to pay for six months of expenses, you should not be in the stock market just yet. Aside from being able to pay bills if something happens, you will also be psychologically more stable and won’t be affected by the stock markets fluctuating.
Make sure you have adequate health coverage
This may sound crazy. What does health insurance have to do with investing in the stock market? The answer is financial stability. In order to be a successful investor, you need to be financially stable outside of your investments and prepared for market down-turns. One of the biggest expenses you may ever incur would be that of a major medical incident. Without adequate heath insurance, it could wipe you out.
Start Early and Take Advantage of Compounding Interest
Take advantage of the power of compounding interest. Use our compound interest calculator to see how just a few years can have a dramatic effect on your savings account.
Diversify your Portfolio
You need to be diversified. This means owning stocks, bonds and cash accounts. Within your stock portfolio, you want to be diversified and invest in businesses across sectors.