5 Tips To Investing In Stocks For The First Time

The stock market is one of the best ways to generate a passive income. That’s why many wealthy people are involved in this market, either directly or through managed funds. Unfortunately, many inexperienced investors end up losing in this market.  That’s because they get into it without a good understanding of how it works. To help you make the most out of the stock market, here are 5 tips to investing in stocks for the 1st time.

 

  1. Find a low cost broker

One of the things that hurt individual investors in the stock market is brokerage fees. For you to make the most out of it, you need to find a trading platform that has low commissions and fees. One of the best platforms you can look to when seeking low fees is tradedirect365. This company has some of the lowest brokerage fees in the market. To learn more about them, you can check out their website at https://www.tradedirect365.com.au/.

 

  1. Use low leverage

Leverage is one of the reasons why many people don’t succeed in the stock markets, and in all other financial markets. That’s because people tend to use high leverage in a bid to make lots of money in a short time. This is the wrong way around it, because you end up losing everything when the market moves corrects, and it always does.  For you to make money in the stock markets, you need to lower your leverage, and aim for long term consistency, not one off supernormal profits. Besides, when trading with low leverage, you have a lower emotional attachment to the market, which is good for decision making.

 

  1. Diversify your portfolio

Warren Buffett always advises individual investors to put their money into index funds. That’s because an index tracks the entire market rather than betting all on single stocks. It is best for you to go by this advice. However, even when trading for yourself (cherry picking stocks), make sure that you distribute your money across different stock counters, and industries. This helps protect you in case one stock or industry underperforms.

  1. Understand the basics of finance

Before you put you put your money into stocks, educate yourself on the basics. For instance, you can train yourself on financial ratios, as well as on the different strategies that are used to trade the market. This can go a long way in improving your decision making when choosing stocks, which in turn translates to higher probability of profitability. In fact, basic education in finance should be the first step you take before you invest in the stock markets.

 

  1. Invest for the long run

The greatest blunder that newbies make in the stock market is to approach it like a casino, where they get in for a quick buck. That’s a loser’s mindset in the stock market. For you to make money and do so consistently, invest for long term value growth. Even Warren Buffett, the world’s most successful investor, has accumulated his net worth over more than 50 years of investing. Having a long-term approach allows you to stay focused even in times of market uncertainty.