If you are new to investing and you want to start small you have to have a few basics. First you will need a computer, an online broker and some money you can afford to lose. You can start slow without a lot of money, in fact that is the best option if this is your first time. If you want a ton of profits you will need to start with a lot of capital, but if you are willing to learn and can look at it as more of an investment opportunity you will make better decisions and be less likely to lose money. At the end of the day you need to gain capital (make a profit) and not lose much cash in the process.
Here are a few common terms you will be better off remembering now to avoid any confusion later:
Capitol: this is money you are using for investing
Gain: think of this as profits or money made
Call: a stock purchase
Put: a stock sale
Portfolio: this is the selection of shares you own
Those five terms should get you started, we can learn more later. Now you have to decide what stock to invest in, this is where you can earn or lose and it is extremely important to do your research. You should start by watching financial television for a few weeks and really pay attention to the markets, what’s going on in the world and how people and businesses react to changes. You also need to be very careful at selecting companies that are financially stable and not sitting on a lot of debt. The internet will be your best friend, read up on what reputable investors are saying and cross check all information at least four or five times if you are going to commit to buy.
You will need to decide on a stock broker to use, it can be an online service or a live agent. You need to assess the background of the broker you use (online or live) and be positive you are aware of all fees paid and how and when you have to pay. You also need to know all state and federal taxes you will owe on your gains. Depending on your financial & mathematical ability, you may be able to create a price formula for individual trades and for different buying options so that you know exactly what you need to achieve to make gains and how much they will be.
Next we look at some simple ideas when figuring out how much to invest, or at least which goal you want to achieve in the future. I made a simple chart showing what your capitol (the amount you are going to use to invest) amount needs to be at various percentage gains from 1-10% to gain $10,000 per year (so assume this chart would be a locked rate at the locked capitol amount for 12 months) you can scale it up or down to meet your needs as well as use it for much shorter time frames to meet your needs. You basically want to decide what percentage gain you want to earn on your capitol, the capitol needed shows you the amount you will gain at that percentage and capitol amount. The best thing to know is that a lower percentage yield is easier to achieve and usually has less risk involved. When you get up to 6% or more you are likely to be in a higher risk situation and it is not advised for a newcomer. A good percentage to stick with would be around 2-3%. At those rates of return you are likely to see some capital gain to help you enjoy investing initially.
For $10,000 yearly gain investing you need to hold the percentage growth below along with the capitol amount for 12 months.
As a first time investor you should stay away from a million dollar trade account. The fact is though, if you work your way up to a million dollar portfolio you will probably be earning around 6-7% averages, even more if you are meant for this. So a million dollar portfolio could easily gain you $70,000 or more each year. The possibilities are endless. Pair this with a job, career or starting your own business and you are well on your way to weekly retirement vacations, paid college tuitions and homes on the shore. You truly can achieve success based solely on how well you view and move on the stock market.
This is an intro to the stock market and investing, for more information or to be a part of the slatetrends community leave comments, email us to the right of these posts and check out all of the social media accounts to see what we have going on every day.