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Start investing in stock

How start investing in stocks?

Do you want to start investing in stocks and don't know how? You are afraid to invest because you do not know what? Here are the five golden rules that every new investor should familiarise himself with:

Start investing in stock: set an objective

The first and most important step before the adventure with investing in stocks is to consider why we want to invest. Of course, to earn money. For holidays? For a dream car? Do we simply want to increase our assets?

It is good to start with a small goal. It will then be more likely to decide where and what to invest in. Bonds are a safe instrument, but they yield less profit. Stocks offer a lot of opportunities, but as a result they are associated with higher risks. Derivatives are the most risky, but they can earn most.

Start investing in stock: invest only as much as you can.

A beginner investor usually does not have a lot of cash. It is good to think about how much of our revenue we can and want to spend on investment. However, let us bear in mind that with small amounts, the return on investment after deduction of commissions and transaction costs may be low.

For the beginning of an adventure with investing in stocks, it is worth to spend the previously set aside money, the loss of which will not expose us to bankruptcy. It is also worth to determine how much loss we can afford. This principle should always be kept in mind, especially when we are excited about what happens very often to beginners.

Starting investing in stock: take the lead on

Before investing, we should at least know the basic concepts and principles of how the market works. Without this knowledge we can only count on our own happiness. However, general economic knowledge is not enough.

Before purchasing shares, we should be familiar with the current financial situation of the company, the management board's plans for the future, its development prospects. In order to be able to react on an ongoing and effective basis to changes in the share price of a company of our choice, we should systematically monitor information about the company, for example, follow management board announcements, be up to date on the company's calendar of events. Each Investor has an individual approach to making decisions and an individual investment style.

Starting investing in stock: open an investment account

In order to start an adventure with the stock exchange, you must first set up an investment account with one of the brokerage houses. How do I choose the best brokerage house? The best thing to do is to start with the question of whether we want to invest through a broker or via the Internet.

If you decide to invest online, it is worth comparing the trading systems available on the market. An important factor in choosing a broker is also the level of fees and commissions and additional trading tools/platforms, which he has in his offer.

Starting investing in stock: control risk

Investing money in stocks always involves a risk. How to reduce them?

Do not invest everything in one company or instrument. It is a good idea to have several different instruments in the investment portfolio, because if one of them falls, the price of one instrument may rise - then the portfolio does not lose as much in value. Such an activity is called portfolio diversification.  Prepare yourself well for every investment.  Learn to control your emotions. Don't make a decision too hastily.

As you can see, it's not easy to take the first steps on the stock market. A common mistake of beginners is a lack of knowledge and regularity, without which the chances for good results are low. Let us also not forget the principles that we set ourselves at the beginning and according to which we intend to invest. Often, under the influence of fear or euphoria, we make ill-considered and unreasonable decisions. It is therefore important to learn to control them.


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