What You Need to Know Before Start Investing
Heard your friend talking about investing? Did you eavesdrop about a HOT stock? Can’t wait to start investing? HOLD IT!
It’s only during bad times that people realize the importance of having multiple sources of income. But, before start randomly putting your money in the stock market, make sure you know a few things about investing!
Google says when people search for financials, they search for stock investing. It’s a source of (passive) income and not a bad option at all. Now, I will stop you right there. Before you start investing in random stocks and start throwing away your whole life’s savings, ask yourself “What I need to know before you start investing in stocks?”. Welcome to stock investing!
Investing in stocks requires great amounts of time, patience of a saint and little money to start with. If you don’t have the time and money for stock investing it is better to let it go (for now), otherwise you will fail. Don’t have time but do you have money? Hire someone to do it for you.
The stock market is a device for transferring money from the impatient to the patient – Warren Buffett
Don’t invest money you need immediately
Have a pile of cash sitting in the bank and sweeping flies? Put them to work ASAP! Before starting investing, make sure you have saved some money for the difficult times. Avoid using your nest savings, invest money you don’t need in the next months.
Forget the fortune cookies
Luck, tarot card reading or tossing coins, don’t work in investing. What you can do instead is actually read. Read about investments, strategies, and companies. It’s crucial to get yourself educated in stock investing, if you need returns. Spend some time reading, you won’t regret it. No idea where to start? Check here my favorite investment book list and get started asap.
Don’t do this
Don’t expect immediate returns
Investing will bring returns, but not as soon as you purchase the stocks. Usually, a stock is a good buy when its price has recently dropped. Remember “ Always buy at discount”. First, you plant the seeds and after you see them growing.
Selling? Think twice!
Following point #4, the return will not be generated as fast, you will need to wait. Panic selling is the worst behavior of an investor and the most common. Panic selling keeps you away from your goal, which is to generate a new source of income. Just distance yourself from your phone, take a walk and think it through.
Block your ears
Avoid watching, listening or reading about “hot” stocks or buying advice from unreliable sources (actually I will say from any sources). Read more about the most common beginner’s mistakes.
Investing in stocks will test your limits
Well if you’re the type that always eats ice cream in winter and drinks soup in summer, then it seems you’ve trained mentally to ignore others and go against the norm. Investing is about doing the exact opposite that the crowds do, they sell you buy, they buy you sell (not all the time though). Stock investing will challenge your nerves, and your stress levels and might keep you awake a few nights.
Doing your homework and being prepared for the challenges of investing will help you avoid surprising feelings. Investing in stocks is not terrifying as long as you read and be patient. It’s just another game. It’s just another Moneypoly round. Enjoy it!
Article by ACH