Not having any clue with the stock market but planning to make an investment? The whole thing could be overwhelming and intimidating at the same time. Stocks are different from money market funds, certificates of deposit or savings account. That being said, stock’s value rises and falls depending on the market situation. If you don’t have enough knowledge or experience in investing, there is a big possibility of losing majority of your capital upon investment.
As for business owners on the other hand like those in dental debt collection, clothing or whatnot, they may have cushion to lose since they always have something to fall back on. For those who have none though, it is extremely important to learn and understand about the fundamentals of stock investments.
If you wish to buy some stocks, then you need to find yourself an online broker. Even after finding a broker that you can trust, there are still many other things that should be taken into consideration. To avoid confusion on this matter, there are few tips to be reminded of.
Find out Your Goal
Just before starting to any sort of investing, the very first thing that you must do is ensuring that your financial situation is somewhere that can cover for this activity you’re trying to do. Your financial baggage will include everything from your household budget, personal expenses all the way to your income and debt.
Before putting any of your cash to stock market, it is imperative that you put away some that won’t be subject to risk or whatever.
Being able to have cash reserve that is equivalent to at least 90 days of your living expenses must be the minimum.
There are couple of reasons why having cash reserve is important and they are:
- They serve as emergency fund in case of financial emergencies
- It will keep you from pressing the panic button in the event that you take a dive on an investment
Start it Off with Exchange Traded Funds or Mutual Funds
If you are just starting with investing, you are better with mutual funds as well as exchange traded funds or simply, UTFs instead of going directly to stocks. Funds are managed professionally and this will help in removing the burden of choosing stocks from the get go. Then, once you become comfortable with the stock market and more equipped with experience and knowledge, that is when you can slowly move up.