Do you have an interest in building a stock portfolio but have always felt intimidated by the industry? It’s understandable, as there is a lot to learn, all kinds of different terminology, and not everyone feels good about taking risks with their finances. The good news is that you can limit and mitigate much of the risk by educating yourself on the basics and following some simple steps.
With that said, here are six tips that are perfect for beginners who want to build their stock portfolio and get into the market.
Choose the “Safest” Strategy
As a newbie in the stock market, it’s often a good idea to start with the “safest” strategy, recognizing that nothing is ever guaranteed. Experts tend to agree that the buy and hold strategy is the easiest and safest to adopt. What this means is that you purchase stock to hold it for a while so you can watch it appreciate. This isn’t meant to offer big gains in a short period, rather, this is meant as a long-haul investment.
Think of it as a way to ease into the markets, allowing you to get used to things before making big moves.
Watching the Markets Can Be Tricky
The other investment option or strategy is to watch the markets so that you can focus on timing. Timing can help you determine the best time to buy and sell, but this comes with a degree of risk. It hinges on the fact you will be able to watch the markets closely and that you will be able to read the signs and gauge things correctly. There are plenty of variables here, and for newbies, it can be a bit much.
Learn the Stock Market Holidays
Did you know there are a handful of days in the year when the U.S. stock market is closed? That goes for the New York Stock Exchange (NYSE) and the NASDAQ Stock Market. On these days you won’t be able to buy or sell, so you’ll want to keep track of US stock market holidays, factoring it into any portfolio moves and plans you have.
As well, you’ll want to be aware of regular trading hours, which are Monday through Friday. The markets open at 9:30 AM and close at 4:00 PM EST.
Only Invest What You are Prepared to Lose
While this may not seem like a positive tip, it’s a realistic one. Any seasoned investor will tell you that you should only invest what you’re prepared to lose. You can’t go into the process assuming you’ll make a profit, and you have to be okay with the reality of losing everything you’ve put in.
What Industries are Growing?
Investing is all about timing and ideally, you want to get in before a boom or growth period takes place. This requires market and trend knowledge of specific industries and sectors. What industries are on the cusp of growth? Which ones are currently starting an up-swing? What does their future look like? Is this sustained growth or short-term? Has that industry gone through growth periods before and if so what did it look like and how long did it last?
Diversification Can Mitigate Potential Disasters
The final tip is to embrace diversification. This means investing in a variety of risks and stocks so that you don’t have all your eggs in one basket. If one investment goes badly, you still have others to fall back on.
You’re Ready to Get Started
By using these simple tips and easing yourself into the stock market, you’ll feel well-prepared to make decisions and hopefully see some positive results.