Investing In The Stock Market – Advice For Beginners

by Andrea

banks, investments, stocks

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Wondering how to invest in the stock market for the first time?

If you think that playing the stock market is out of your reach because you just don’t understand how to do it, then you’re not alone.  Trust me.

In the past, I dabbled a little in stocks, using an online investment service to invest $10 a month.  I was very conservative.  When it was time for me to buy a house, I sold my stocks (which had done well in spite of my lack of knowledge) and pulled out knowing that I was making wild guesses at best.

investing-in-stocks

That was really no way to invest in the stock market.  Still, I have always wondered about how to go about gaining the knowledge for investing in the stock market wisely.

 

Basic Stock Market Tools

Before investing a single cent, it’s a good idea to educate yourself on the basics of the stock market.

I have always found that if you want to understand something at an elementary level, then you need to go to an elementary source.  Therefore, I would start with some children’s tutorial sites.  (Remember, I’m learning right along with you, so these links are as much for myself as they are for those who are interested in learning about the stock market for the first time.)

  • Thinkquest teaches kids about investing with games quizzes, and beginner, intermediate, and advanced instructions.
  • The Mint explains what the stock market is in simple terms.  The site also tells you about ways to invest and informs you of your risks and rewards.

I also recommend purchasing a couple of elementary stock market books such as The Neatest Little Guide to Stock Market Investing and The Stock Market: How Economics Works by Donna Jo Fuller.

 

Practice First

Playing might be for children, but it makes good sense to “play” stock market before actually investing any money.

There are lots of mock stock market activities that you can participate in to get an idea of how you apply your stock market knowledge.

The Virtual Stock Exchange has a FREE online trading game that will allow you to “play” publicly or privately, test your strategy, and manage a personal portfolio.  It also allows you to research the stock market on an adult level.

Even after you feel like you have a bit of stock market knowledge, you still need to research your stocks.

Here is a step-by-step tutorial on how to research a stock before you invest, using Cheerios as an example.

 

Start Investing

Once you feel comfortable trading in stocks, and have a bit of money to work with, it may be time to start investing.

If you want to begin investing immediately, you should know that we are currently in a bear market — meaning there are more losses than gains at this particular time.

iStock_000000747789Small.jpg Here is a great Bear Market Guide that you should study before you jump in and begin investing in the stock market.

If you don’t exactly know where to start investing, check out The Best Mutual Funds You Can Buy.

Investment Fraud Alert

Finally, be careful to not fall for investment frauds.   Frauds will try to sell you “hot” stocks.

Wondering what frauds look like?  For starters… aggressive sales, absentee brokers, advanced fee requests and further demands for money are some of the warning signs you should look for.

Check out these 5 tips to overcome your fear of the stock market.

Investing in the stock market can be a risky venture — especially during a poor economy — but there are many who are successfully navigating this rocky road.

In order to be like them and be successful, there are 3 things you need to keep in mind:

  • Understand the type of investor you are, and make your choices based on that rather than on what kind of investor someone else is.
  • Think for yourself when it comes to making decisions about stock investments, and whether to buy or sell certain stocks. It’s easy to get caught up in the hoopla when some big wig is screaming about how they think this stock or that stock is going to do well or fail.
  • Research all stock tips before doing anything with your own investment practices. Don’t rely on tips to steer you one way or the other. Do your own research instead.