This article is for beginners who want to start investing in the stock market. If you are already an investor, you might not find new information here.
The stock market has always been a topic of debate. Some say it is a place to gamble, while others say it can make you extremely wealthy.
If you want to invest in the stock market, you must have good knowledge about it. So, read books, understand the rules, and follow the big players. These are some common pieces of advice given to aspiring investors. But, here’s something that many “advice-givers” miss out on: To excel in the stock market, be in the market.
Reading a hundred books on investing will not help you if you do not step into the market. It is like trying to learn how to swim by reading a book. You have to step inside the pool to learn to swim. Similarly, you have to start investing in the stock market to become good at it.
As a beginner, you might not have enough knowledge about it. That’s okay. You don’t have to invest a lot of money. Instead, start by making small investments. But, just start. Here are a few things you can do:
Entering the market without prior knowledge is a bad idea. First, you have to understand the stock market basics, including what it is and how it works. Other than that, you might also want to know the process of investing in the market. It incorporates your requirements and eligibility to invest.
Acquiring knowledge is always helpful. So, learn as much as possible about finance, money management, and investing. Even though the basics are the same, you must learn about the stock market you want to invest in. As I said, read books and articles, understand the rules, and listen to what people are saying. It is easier to acquire knowledge online in the digital age.
Knowledge Unused is Knowledge Wasted
It is the whole point of this article. Acquiring knowledge is not enough. Instead, you must put that knowledge into action. So, do whatever you need to do to step into the market. But, first, ensure you have fulfilled the basic requirements like opening a stockbroker/trading account, bank account, and Demat account.
It is preferable to set aside some money for your initial investment. But, as I said, start with something small. And, this might sound a little harsh but, think of that money as you have lost it. Why so? Because it will not make you emotionally upset if you lose it in the market. It is like a safety guard for your first investment.
So, if you make money off your first investment, good. But, suppose you lose money, also good. But, you will learn more from losing money than making money when you are starting. If you start making money from your early days, your greed steps in, and you will want to make more money. So, there will be a chance that you will make stupid decisions.
Experience Makes You Wise
In the stock market, experience matters the most. When I first started investing back in 2017, I only knew the basics. I knew that if I bought a stock at a low price and sold it at a high price, I would profit. But, I had no idea about dividends, book closures, mergers/acquisitions, price adjustments, right/bonus shares, and so forth.
Over time, I understood each of these. I also learned that compound interest would do its job and increase your portfolio value if you invest in dividend-paying stocks. But, I still learn new things every day about investing and the market.
So try to gain as much experience as you can. That is why people often say, “Invest early.” If you invest early, you not only have the opportunity to increase your portfolio value over time, but you will also gain more experience.
You learn more by doing things rather than reading about them. So, it’s time for you to do things. If you are holding yourself back—thinking you are not ready to invest in the stock market—you might be missing significant opportunities to learn (and earn).
Start today. The best way to start is by talking to someone who knows about investing. Tell them that you want to invest in the stock market and that you need some guidance. Read about investing online. Watch videos. Follow websites and blogs that provide consistent information. But do not rely on them entirely. Make sure that the source of information is genuine.
Investing in stocks is one of the best ways to achieve financial freedom. You can make good money doing so. But, if you do it the wrong way, you can quickly lose money. The number one rule in the stock market is that you have to be patient. As Warren Buffet says,
“The stock market is a device for transferring money from the impatient to the patient.” —Warren Buffett
Remember that the market is not a get-rich-quick machine, although some investors do believe that. When they see the price of a stock skyrocket every day, it feels like you can easily earn a lot of money within a few days. But, prices go up and come down quickly.
You have to remain patient and understand how the game works. So, make smart decisions. Understand that nobody knows the future of the market. If someone says they do, they are lying.
Now is your time. Start today.