February 24th, 2010 by Tom Kearney
There is certainly a state of flux in the present day stock markets but that is no reason why you should not learn more about stock market investing. The good news is that there are many useful tips available that will help you understand how to invest your money profitably in the best stocks.
At the very outset, it must be emphasized that success in stock market investing only comes to those who plan their activities before investing their money.
- In fact, it is also safe and wise to distribute your investments and
- in addition you will need to also make regular investments plus
- you should invest with a long term plan in mind.
It is also important that you invest without hesitating because then you can take advantage of the benefits of compounding which will also begin sooner.
- Time is the magic wand that has to be waived as only it can help transform cents into dollars.
- At the same time, you must also learn to avoid futures and derivatives.
The third important tip is that do not try leveraging as you will find it
- hard to predict future trends in the short term and so
- it is better to buy into a market rather than invest your money on certain stocks.
Now, when it comes to picking individual stocks you need to choose stocks that are a mirror of the much broader indexes and at the same time you need to ensure that you do not purchase single or even handful of stock exposures. It is always safer to spread your risk across different market segments so that even if a particular stock fails, you will have other stocks that can help cover the losses.
Before purchasing stocks,
- you need to look at how well a company is earning and
- base your buying decision on this factor, instead of on the current stock prices.
- These stock prices often give wrong impressions and will not reflect the true nature of a company’s welfare.
In addition, when some of your stocks turn out to be duds, you must not hesitate in selling them off as soon as is possible.
- If you have erred in buying stocks, then you should admit this and get rid of the duds and in this way cut your losses.
- Also, be sure that you base your buying of stock decisions according to what your head says, and not what your heart is telling you.
- It also means that when your brain tells you to buy a stock, you should buy the stock and not make the mistake of purchasing stocks based on emotions.
- Buying into large company stocks is always prudent as the chances of earning profits in the long run are higher as compared to other stocks.
- Therefore, you should buy into large stocks while avoiding purchasing penny stocks which are hard to evaluate and so are best left alone.