• Stock market tips to create wealth.stock market analysis screenshot image by .shock from Fotolia.com
  
  Investors go to the stock market to buy and sell stocks at agreed prices. To win in the market you must give a lot of thought to what you are buying and selling and know what forces are influencing the sectors in which you are invested. Creating wealth comes from an accumulation of knowledge, market savvy and following time-tested tips.
  
  

Short and Long-term Investments

• Depending on your goals, you can invest your money either short or long term. Short-term investments usually last from three to five years. The downside is greater fluctuation risk caused by the demand-supply influences that drive the market. Nonetheless, including short-term investments in your portfolio can create wealth since they also hold the potential to grow tremendously in a short time.
  
  On the other hand, you need a portfolio mix that includes long-term investments. These usually go from five to 20 years and are less prone to market fluctuations, especially the radical price movements that recent years have seen. Over time they can produce a strong return on investment.
  
  

Timing and Cost Averaging

• Relying on timing is normally difficult, given the unpredictability of the market. Paying attention and doing your research can help you know when sectors or companies are doing well---or when major changes are coming that could signal a stock will go up in the future.
  
  Most people don't have to "time" their investments. Instead, they can cost average. By purchasing small portions of shares over time, investors often can obtain large amounts of stock at lower prices. This avoids the risk on buying the shares all at once and getting hurt by bad timing.
  
  

Tax Considerations and Tax Deferred Plans

• Taxes incurred in selling stocks should also be considered. Holding shares for at least a year will save you from incurring a high tax rate that normally accompanies early selling.
  
  Further, investing in tax deferred plans will free you from many tax implications.
  
  

Diversification and Mutual Funds

• Mutual funds offer an opportunity to diversify and gain stability, since they are a collection of equities in which losses in some can be offset through gains in others.
  
  Mutual funds also offer diversity. You can select from funds concentrated on everything from new technology companies and utilities to blue chip stocks. As with traditional stock buying, investors in mutual funds can seek equities that offer quick growth and high risk or long-term growth and low risk.
  
  

Avoiding Mutual Fund Loads and Penny Stocks

• Since it has not been shown that mutual funds with load charges bring larger returns, it is usually best to avoid buying mutual funds that carry an upfront fee and deduct a percentage from your investment.
  
  In addition, penny stocks---according to most professional trading advice---have little earnings potential and should be avoided. This is where fraud and manipulation usually occur, according to TradingSphere.com.