Investing in the market can be very intimidating for newbies. However, worry not. Investing will be one of the greatest decisions you ever make. On average, a diversified stock portfolio stands to make a 7-10% return. The average savings account will yield less than 1%. IHowever, investing in the market presents a ton of options which can make for a daunting experience. Below we’ve detailed some quick and easy tips to get you started on investing in stocks for beginners.
Investing starts with understanding your level of tolerance both financially and emotionally. Financially, commit to investing a certain amount of money at a rate at which you’re comfortable (I prefer every other week). This amount should be something you can tolerate to lose so don’t over extend yourself. Second, get comfortable with some level of uncertainty. Your ability to invest rests not only on your financial means, but also on your ability to emotionally tolerate fluctuations and uncertainty. The longer you play the game, the more tolerant you become with fluctuations.
I’m sure your cousin has heard of this really great stock that’s just about to take off. However, we strongly suggest that as a new investor you stick with large, well-known companies with proven track records of solid performance or the “blue chip stocks”. Major players like Coca-Cola, J&J, Aflac and Clorox are all examples of what’s known as “Dividend Aristocrats” which means they’re listed on the S&P 500, have had 25 years of consecutive dividend growth, and meet other liquidity requirements. In other words, these are “safer” bets than other more volatile companies. Once you become more comfortable you can try your hand at newer, more volatile stocks.
Learning about the market takes time. Dedicate time every day or every week to learning a little bit more. Read books, watch videos, and keep checking back on our blog for more updates. Remember to not over extend yourself. The market is a long-term game so try not to get spooked by the daily fluctuations. If you’re still unsure, you can always consult with a financial planner who can help guide you along the way.