It doesn’t take a business degree to know there’s value in investing in stocks.
Jumping into the world of public trading may seem intimidating, but with a little insider knowledge (the legal kind), you can start building your assets in no time. If Wolf of Wall Street didn’t tell you everything you need to know, check out these four tips for investing in stocks!
#1 Use Stock Trading Apps
Though you may be new to stocks, you’re probably familiar with mobile apps. Many beginners find greater ease in entering the stock market through the use of helpful trading applications.
For a simple way to manage your investments on the go, apps like Robinhood offer users handy tools, such as:
- Notifications on your stocks
- A digital portfolio
- Live trading
- Price tracking
Key takeaway: Rookie traders will have better luck using a stock trading app than trying to manage all their investments separately.
#2 Keep Financial Goals in Mind
Set yourself up for success by making a plan before you even think about cracking open your wallet or checkbook. Before you can reach your financial goals, you have to take the time to set them. Having concrete goals will inform when, where, and most importantly, how much you invest.
Establish various milestones for each step of the way, including:
- Short-term goals (within the next year)
- Medium-term goals (five or ten years down the road)
- Long-term goals (your total life savings)
Each of these goals should have a specific monetary value attached to them. If it looks like your stocks are crashing before you’ve reached your projected goal, it may be a sign to pull out your shares and start again elsewhere.
Key takeaway: Having a set amount of money to work toward will keep you on track and encourage wise monetary choices.
#3 Study Rising Markets
One rookie mistake is investing in stocks that have already reached their peak.
The way to make worthwhile investments is to get in on the ground floor of budding companies. Some of the most popular markets that are just beginning to find their footing include:
- Plant-based foods – Over 9 million people in the United States have switched to a plant-based diet since 2005. Publicly-traded companies like Beyond Meat are cashing in on this phenomenon. Investing in vegan food companies may be the way to go as advancements in plant-based production continue to evolve.
- CBD – Widespread legalization of cannabidiol, the non-psychoactive compound found in the hemp plant, has placed the CBD market on an upswing. With new brands releasing innovative products regularly—like CBDfx—this is a great example of an industry that’s only going to get bigger (and more profitable) with time.
- Electric cars – In October 2020, California lawmakers made the decision to ban the sale of non-electric vehicles by 2035. As stock in electric automakers (like Tesla, among others) continues to rise, investing in a similar brand could be fruitful for stockholders in the near future.
Key takeaway: Invest in promising new companies in up-and-coming industries, rather than splurging on expensive stocks with little room for growth.
#4 Carefully Weigh Risks & Rewards
If you’re just starting out, high-risk investments won’t create a sturdy foundation for future trading. The key to playing it safe (at least in your early days) will rely on two factors:
- How much you’re investing – Never invest more money than you can afford to lose. When all your savings are tied up in risky stocks, you have no assets to put towards building your portfolio.
- How many investments you have – It can be tempting to buy up stocks left and right, in hopes that one will make it big, but this isn’t a great strategy in terms of risk management. The more stocks you have, the more variables you’re depending on (unfortunately, those variables don’t always go your way). Start small and work your way up.
Key takeaway: Seeing your first stock rise may give you a boost of confidence, but don’t go overboard just yet. Rome wasn’t built in a day, and neither is a robust investment portfolio.
There’s No Better Time to Start
Entering into the stock market with these suggestions in mind will help you make sound investing decisions. You can’t control the ups and downs of each industry, but you can make a point to invest in companies you believe in.
Remember to ease into the process, and don’t rush yourself. Like a fine wine or aged gouda, wise investments take time.