Are You Debating Investing in Stocks? What You Need to Know

Personal finance

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Trading stocks is a sexy topic. It’s very interesting. We’ve all heard anecdotes of someone that invested $20 and became rich overnight. Everyone hears a story like that. We all want to be that success story. However, we rarely hear about both sides of the coin.

Is it possible to become rich in a matter of days off the stock market? Not really.

Do you need tons of money to make money on the stock market? Nope. You don’t have to be rich. You can get started with a few dollars.

Can anyone trade stocks? Absolutely! You just have to open an account with an online brokerage. This can take only a few minutes and you can be trading stocks in the near future.

For now, let’s look at the idea of investing stocks and what to consider if this if a financial experiment that you’re considering.

“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” — Warren Buffett

Are you debating investing in stocks? Let’s look at what you need to know.

Stock prices always change!

The price of the stock will fluctuate all day every single day. Can you handle this? When I first started trading stocks, I couldn’t fathom this thought. I would hit refresh on the page every couple of minutes. I then soon realized that this was no way to live life. You have to be able to come to terms with the fact that the stock price will constantly change. Good and bad. Sometimes it will soar through the roof, tempting you to sell. Other times, it will crash, tempting you to pull out of the stock market forever. Just a warning.

On that note…

You need to be able to handle risk.

How do you deal with risks? What happens to you in an uncertain situation? Some investors are just not meant for the stock market. Others thrive off it! I can’t tell you what to do. All I can suggest is that you understand your own investor profile so that you make moves according to what you can handle.

Most trading accounts will actually help you out with this. They’ll ask you questions to see what you’re all about. They don’t want you to get in over your heard right off the bat. Some rookie investors need to start off with bonds and more conservative investments.

Can you handle risks?

Do you understand the business of the company?

I’ve been a student of Warren Buffett for years now. He preaches the importance of understanding what the company does before you invest your money into it. This was my biggest mistake as a young investor. I would invest my money into companies that I simply did NOT understand.

Why does this matter? Because it’s impossible for you to grasp how things are going if you don’t understand the business. Just because your co-worker or a friend of a friend suggests that you invest in a company, it doesn’t make it the right thing to do. The right companies to invest in are usually the ones that you understand.

You can check out E* trade online trading to get started right now! What will be your first stock purchase?

 “Price is what you pay. Value is what you get.” — Warren Buffett

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