Buying your first stock market share is a big decision. When you do it correctly, you’re setting yourself up for a reliable and solid financial future. Many savvy investors take this route to build a retirement fund, or grow the kids’ college pot. The stock market is also the home of some disastrous horror stories. Investors have lost their life savings through poor investment decisions. With that in mind, is the stock market a safe place to put your money?
The answer is yes, if you’re sensible. The horror stories are mostly linked to day-traders who try to speculate the rise and fall of shares. They’ll buy when prices are low, and sell later that day when they soar. Of course, this can all go wrong very quickly! Instead, we suggest playing a long, sensible game with your investments. Today we’re going to show you exactly how to do that.
Understand that it’s not a get-rich-quick scheme
Lots of people look at the stock market and think it’s the answer to their monetary problems. If you’re looking for quick wins, you’re in the wrong place. Yes, it is possible with some lucky day-trading, but on the whole, you should look at it as a long-term game. Think of investing like a high yielding savings account, rather than winning the lottery. Once you’ve got that perspective in mind, it’s easier to choose your first stock investment.
Look for strong, stable shares
The stock market is filled with hundreds of different companies. Some companies are volatile and their value fluctuates heavily. Buying shares in a company like this would be very risky as you can’t predict its trajectory. Instead, you’re looking for a stable business with a gentle upward curve. Walmart stocks are a fantastic investment because they’re a giant, forward thinking company. The same is true for Apple and other stalwart industries. Look for shares that are consistent and solid.
Do your research into the company itself
Before you buy shares in a company, you should thoroughly investigate and research. Get access to their financial accounts and look for strong, consistent growth. Research the board members and analyse their future plans. Does this company have a resilient plan for the future with a good team to lead it? When you’re looking for a long-term investment, look for a company that is planning for the long-term. This will help you remove the risk from your investments.
Look for another investment
If you’re new to the stock market, you might wonder why we’d suggest multiple investments. Well, the trouble with investing in one company is that you’re putting your eggs in one basket. If that company suffers a setback or loses value, your share price will suffer. Instead, you should have a number of investments across a variety of industries. That way, if one share price tanks, you’ll have a safety net of other investments. It will help keep balance and structure to your portfolio.
Your very first stock market investment is a big step. Just remember to take your time. Research and investigate the company and the stock market itself. Finally, never invest in something you don’t understand!