There’s a saying that money makes money and there’s not a more capitalist example than playing the stock market. For a newbie investor, this can be a bit intimidating to wade in especially if you don’t have a lot of money to lose.
If you’re new to investing, the lack of disposable cash might be an issue. Before you start investing, you should always have an emergency fund available in case you lose a job or have a medical expense you need to take care of.
Moreover, you should also view investment opportunities as a long term investment strategy. Too many people new to investing give themselves fits from following the daily fluctuations of the stocks they purchased. This is a bad idea as short term highs and lows have no bearing on long term success.
This is not to say that you should not keep an eye on your investments. After all, you need to pull the plug if a company’s business plan changes drastically but generally, this does not happen without warning and a shareholders vote. The point is, the due diligence and research should be done before investing so you know in advance what the company is about and where they are heading.
Finally, if you are a new investor, learn to think for yourself despite the hot investment tips and picks given on some financial show. By the time mainstream TV does a news piece on a company, the ship has already sailed and you might be buying on hype as you and other people pile on as the really early birds dump their shares for a profit.
The key to making money on the stock market is to be a contrarian investor. This means you really follow the principle of buying low when stocks are disfavored and sell high when there’s hype.