Hints and Tips for the first time investor

The realm of the investor is a difficult one to master and not for the faint hearted. No investment is ever risk free.

If you’re planning on trying your luck on the stock market, read a few of our tips for the first time investor.

1    Get informed –

You need to really understand how the stock market works to ensure that you know exactly what you’re doing. The market, especially during a recession, is a tricky beast to tame, knowing as much as you can about your potential investment and the market itself will hopefully make you a much more confident investor. Moneyextra has a whole resource bank of tools and information to help you make an informed decision.

2    Live by the rule ‘ Don’t invest what you can’t afford to lose’ –

Gambling on the stock market is rarely risk free, so you should not risk anything that you can’t afford to live without. When you’re starting out, investing a small amount should allow you to get a feel for the market as you start getting more experience you can take more risks but always keep the golden rule in mind.
 

3    Keep detached –

Emotions will cloud your judgement, so this ties in number 2; if you’re not betting the farm then you really should try being aloof however hard that may be. It will take years before you could consider yourself a shrewd investor and you won’t be the first one to make school boy errors so don’t worry about it and remember no one is infallible, try to learn from your mistakes so you don’t repeat them.
 

4    Be financially savvy –

Don’t leave yourself without a financial cushion. Try to maintain a regular income and try to ensure that your unsecured debt is paid off first. It can also be a good idea to have some money put by. For example, if you lose your source of income and have to sell your investments, you could lose your money if you sell at the wrong time. Having a financial cushion will mean you can continue to survive until it is more profitable for you to sell.
 

5    Speculate to accumulate -

 

The above hints and tips warn you to be cautious with your cash, but you shouldn’t really forget the main reason for why you wanted to invest in the first place. You need to ready to run some risk and if your not then investing probably isn’t for you.

 

Good luck and may you have a long and successful investing career!
 

Moneyextra.com recommends you take independent financial advice before acting on any article

2010-08-19 16:02:07 © Moneyextra.com