Saving your hard earned money is the best thing to do. But investment it to the right company is the wisest thing for you to do to make a profit out of your hard earn money. Saving your money in the bank with a tiny bit of interest is a waste of time when you are thinking big.
Hearing those big chunks of dollars from people who made millions from their stocks investment is quite enticing but the truth behind making those millions is quite daunting. Aside from investing your money, you also need to invest a lot of your time and efforts. You need to be very hands-on in dealing this type of investment.
Investing in Stocks is a very complicated matter when you are a beginner. You need to learn the basics in order to understand the whole process. There are a lot of things you need to know to get yourself to the right stocks and not waste your hard-earned money at the end. The first thing you need to consider when thinking of investing in stocks is look at the amount of money you have in your bank after your monthly expenses. This money should be your savings meaning, you should have savings account that you don’t use to pay your monthly expenses. In other words, this is your extra money.
If you have a family to feed and more bills to pay every month, to keep you safe money-wise at all times is to allot at least 6 months savings for your monthly expenses to prepare yourself in the event of a calamity or loss of job. This strategy will save you from too much stress and depression when the unexpected happens.
Let’s say, your monthly expenses is $2000. $2000 (monthly expenses) x 6 months = $12,000. So, you should have at least $12000 in your savings before you venture yourself into investing your money into stocks. You cannot invest your savings into stocks or any other type of investment when you have a family to feed. When you have kids to send to school.
Investing your money into stocks is a risky thing to do so you should do it with your 10th-month-savings. I divide my savings into five categories.
- The first category is the “Expense Fund”. This is what I call the “One month Savings”. I save money to pay my monthly expenses.
- The second category is the “Emergency Fund”. The 6 months savings” in case of emergency that I cannot touch unless a calamity or emergency strikes.
- The third category is the “Standby Fund”. One month extra savings for whatever purposes that i can touch anytime i need it.
- The fourth category is the “Retirement Fund”. This is very important. You have to prepare yourself for your retirement age. You need to open an individual retirement account (IRA). You can set up an appointment with a financial institution that can help you in opening a new account.
- The fifth category is the “Investment Fund” that I can use to invest in stocks or any other form of investment.
Investing into stocks or in any other type of investment involves a risk. It’s a gamble. You never know if you’re gonna win or lose. So never use your first, second, third and foourth categories for investment. What if your first investment will not be in your favor and will wash your money down the drain?
When you think of trying to invest your money in stocks, you have to set your goal first. Make sure you passed all the four categories before you step your foot into investing into stocks.
After you passed the four categories and now ready to join-in the stock market business, the first thing you need to do
- is do a research. Get some education on how stock market works.
- learn important terminologies about the stock market every investor need to know like
- Stock Market
- Stock Exchange,
- Stocks Trading
- Common Stocks
- Share Market
- Mutual Fund,
- Dow Jones
- Nasdaq Exchange
- Online Brokerage Account: TD Ameritrade, E-Trade, Fidelity, Charles Schwab, Robinhood, Merill Edge
- Broker Fee
- IPO (Initial Public Offering)
- FPO (Ollow-on Public Offering)
- Ticker Symbol
- do a research on the best online stock brokers for beginners. Study each company. Read reviews about the company. Watch Youtube videos.
- Get the top 5 best companies according to your research then start calling them one-by-one and tell them about your interest in the stock market and you want to know about their services.
- Before calling the brokerage companies, make sure you already learned about the stock market terminologies so that when you talk to the broker, you know what he is talking about.
- Don’t start big. Start investing small amount of money to test the market.