How to Invest in the Stock Market?
You can download your FREE e-book on learning How to Invest in the Stock Market. But here are 5 rules to investing in the stock market to get you started:
Rule 1: Diversify Risk…….. Spread the risk around stocks from different industries. As a rule of thumb….invest no more than 5% of the value of your portfolio in any one stock.
Rule 2: Know your Investor Profile….. Everybody is different and will have different risk appetites. A low risk investor needs to invest in different types of stocks than a high risk investor. Knowing your profile will direct you to the right stocks.
Rule 3: Invest in fundamentals not charts… Don’t be lazy! Charts give you a picture of the past..that’s all. They do not give you buy or sell signals. Trading on charts is going to lead you to failure. Instead learn how to invest in the fundamental value of the company.
Rule 4: Have target prices for your stock investments…. How to Invest in the Stock Market successfully depends on two factors ultimately. The price you pay for the stock and the price you sell the stock at. If you overpay for the stock when you invest you are putting the odds against you. Likewise, if you do not know when to sell, you may overstay your welcome and watch healthy profits disintegrate.
Rule 5: Revisit the fundamentals at earnings time…. Every quarter publicly quoted companies report their performance for the previous three months. They tell investors how their sales, profits and other financial metrics went. More importantly most companies will tell you what they expect to achieve in the next quarter and/or financial year. Based on the new information received you should received the fundamentals and reassess your target price.