Investing in the stock market can seem intimidating, but it doesn’t have to be. Simply follow these steps, and you’ll be well on your way to stacking up profits:
1. Pick an Investment Strategy– When it comes to investing in stocks, you have to have the right strategy in order to succeed. The strategy not only has to be effective, but it has to be the right strategy for you. One of the most important considerations is whether you want to actively manage your portfolio or “set it and forget it”. Another important consideration is whether you’re going to trade based on fundamentals or technicals. Fundamental traders consider the profitability and value proposition of the company, while technical traders focus on patterns and price points that are significant to the market.
2. Pick a Dollar Amount to Invest– Along with a solid strategy, investing the right dollar amount is also of vital importance. You want to invest enough money to make significant returns in the market, but not so much that it will cause you constant anxiety. If you’re wanting to invest more, consider adjusting your lifestyle in order to free up more investment capital.
3. Open an Account with a Brokerage– The next step in your journey is to open a brokerage account with a stock broker. This decision at times can seem just as personal as the prior two steps. Most brokers no longer charge commissions for trades, which has really leveled the playing field and allowed everyday investors the opportunity to afford a high-quality broker. Find a broker that meets your trading needs and preferably one that offers cash-back promotions for depositing money.
4. Decide which Stocks you’ll Invest in– Once you’ve opened your brokerage account, now it’s time to invest in the stock market. You’ll need to choose which stocks to invest in, which will depend on whether you’re going to base your stock picks off of fundamental or technical analysis. Either way, make sure you’re investing in solid companies with a strong track record.
5. Reinvest Your Profits– Once you start making a profit in the stock market, be sure to re-invest your earnings so your account continues to grow. If you’re not sold on this step, do some compound interest calculations so you can see your portfolio’s potential for massive growth.