Stock investment is not for the faint of heart or the over emotional individual looking to make quick returns by investing money they can not afford to lose.
Most people are a little misguided about the benefits and the risks of investing in the stock market.
Can investing in the stock market be a lucrative investment?Yes.
Is it risky?Of course, but so are many investment vehicles if you don't have the proper education and understanding.
The key to protecting yourself in the stock market is to understand where you are putting your money.
When you buy stocks you are buying equity or shares of ownership of a particular company.
Stocks are issued to raise money for the corporation.
If the company's profits go up, you "share" in those profits.
If the company's profits fall, so does the price of your stock.
If you sold your stock on a day when the price of that stock is higher than the price you paid for it, you would make a profit from your investment.
1) Get familiar with the Stock Market Lingo Every discipline has its own vocabulary (Medicine, Law, Real Estate, etc.
).
Many times the lack of understanding of the vocabulary is what creates the intimidation and confusion.
You can visit websites such as Stockcharts.
com and Morningstar.
com to start to become familiar with the terms.
You can also visit your local bookstore and start reading books to become familiar with stock investing.
You may think that you don't have the time to get the education, but investing without the education can cost you a fortune.
Investing with education can potentially put you on the road to financial freedom.
Which would you prefer? 2) Be aware of chasing stock tips Chances are you have heard the office break room tip about someone making a killing in XYZ Company or the stock picks from a popular TV analyst.
Fight the urge to blindly go out to purchase the stock.
A great deal of stock investing has to do with timing.
It is possible that by the time you heard the news the stock has already taken a new course and has gone down in value right when you decided to jump on the band wagon.
It is important that you do your due diligence.
Look at the stock chart.
By looking at the stock chart you will be able to examine information such as the current price of the stock, the direction the stock is moving, and the stocks recent and past activity.
3) Never invest money you can not afford to lose.
Emotional stock investing can lead to financial devastation.
If you are investing money you can not afford to lose, it is almost impossible to be objective in your stock investing decisions.
If you are interested in starting consider opening a small brokerage account.
The key is to simply get started.
There are various on-line brokerage companies that allow you to open an account with very little money.
Companies like ShareBuilder.
com allow their costumers to open a brokerage account with no minimum deposit and you can buy stocks for as little as $4 with their automatic investing option.
Many of the online brokerage firms such as OptionsXpress.
com and ThinkorSwim.
com offer Paper Trading accounts.
Paper Trading accounts are virtual brokerage accounts that allow you to trade money in the stock market while experiencing the loss or gain of the market without losing real money.
Paper trading can allow you to get your feet wet in stock investing with the safety of not losing real money.
You are not going to find anyone more concerned about your financial future than you.
So it is critical to become an educated investor even as it relates to stocks.
There is plenty of money to be made in the stock market.
With the proper education, you too can make the stocks part of your investment portfolio.