Are you considering investing in the stock market? Need a beginner’s guide to the stock market? Many people swear that this is the path to riches and steadier income – but it’s not an easy path. In fact, the stock market can be very confusing and intimidating, especially for beginners. Before you jump in headfirst, take a few minutes to read some of the basics that I learned the hard way.
Know Your Rights
When you invest in a company, you’re taking on a responsibility to understand both your rights as an investor as well as the potential risk you’re taking on in the process. Take some time to research the companies in question in order to really understand in what you’re investing and how making the investment could affect you.
It’s Not All About Buying and Selling
I mean, sure, selling stocks at a high price for a nice payout is the ultimate goal for many. Don’t forget that some stocks also pay dividends. This is money that you collect simply for investing in the company.
I know, this seems like an obvious point, right? Well, it’s one of the most difficult parts of building a portfolio. You’re going to be tempted to check in on your stocks every day, and will probably find yourself panicking any time they dip a little. This is part of the process! Don’t pull your investment because of market fluctuation. Stocks change in value – that’s the whole point.
You Owe Taxes
The stock market is not a “tax free” zone. Money that you collect, minus a few exceptions, will be subject to taxes. This includes dividends. Don’t be caught off guard by this fact!
Don’t put all of your eggs in a single basket. If that basket breaks – and not many do, mind you, but there’s always the risk – you lose everything. Build a diverse portfolio that can survive a broken basket or two.
Interested in learning more about the stock market, there’s a great resource of information here that you can use as well!