In this post, I will show you how to be a good stock market investor.
Today, I will tell you how to be a good stock market investor. These 10 tips will help you a lot to become a successful stock market investor.
To become a good stock market investor, you have to follow certain important things. Let’s know what are those things.
- 1. Learn And Gain Knowledge About The Stock Market
- 2. Know your Financial Budget and Determine your Goals.
- 3. Take Risk Only When You Can Handle It
- 4. Learn from Successful Investor And Implement It
- 5. Begin With Managed Investment Fund (Capital Group, Mutual Funds)
- 6. Open Online Investing Account With Low-Cost Service
- 7. Know the Best Time for Buying and Selling the Stocks
- 8. Never believe in Rumours and copy someone else
- 9. Don’t Wait for Time, Make the Time Your
- 10. Diversify Your Portfolio
10 Tips To Be a Stock Market Investor
Here is a complete guide with 10 tips to start investing for beginners. A person should know and follow all these steps to start the journey of the stock market investment.
1. Learn More About the Stock Market
Stock is all about knowledge and experience. More knowledge and more experience will come by learning and practicing.
The stock market is all about strategy, mind work, and market. You can’t change the market but you can learn the tactics and strategies of stock markets.
Lots of books about the stock market have already available in the market, you can purchase them or you can also read online books.
Personally, it is my recommendation to go with online books because it is easy to access and you can read whenever you want. Just start the books and you can read it in the audio form.
Learn from those books that how to deal with any specific situation, what to do when stock market get crashed, what to do when stock market is at very high value.
Some of the best books for stock market learning are mentioned below or you can also search on google for best books for the stock market.
- A Beginner’s Guide to the Stock Market – $7
- The Little Book of Common Sense Investing – $15
- How to Make Money in Stocks – $14
- One Up On Wall Street – $14
- Berkshire Hathaway Letters to Shareholders – $3
- Market Wizards – $15
- A Random Walk Down Wall Street – $11
- Irrational Exuberance – $12
If you do not want to read books, you can also start with an online stock market course. Thousands of stock market courses are available on the Internet.
Many free courses are available in online websites. You can just search on google free stock market courses and you will get the lists of free courses, choose any one of them and learn about the stock market from there.
Some of the best online courses are mentioned below:
- Investors Underground
- Warrior Trading
- Trade Ideas
- Tim Sykes Trading Program
- Investool by TD Ameritrade
- Bulls on Wall Street
- Superman Trades
But, it’s my personal experience that you will more value able information from the Books. Because you get to know what to do in a specific situation in the stock market.
2. Know your Financial Budget then Invest in the Stock Market
Before starting any type of investing whether it is in the stock market or something else, you must know your financial baggage.
We must know how much money we can invest in the stock market. You must have an idea that this amount of money is going to be invested and this much is going to be saved.
Like your financial baggage, you should also determine your goals, without goals you can’t achieve success. Set certain goals of your life that will always help you to learn more about the Stock Market.
It always encourages you to correctly invest in the stock market and work hard. A goal can be anything for some people it can be buying a luxurious car, it can be a world tour, it can be for family also.
Always remember those goals so that you have a reason why you have started investing in the stock market.
3. Take Risk Only When You Can Handle It
Most people start investing in lots of money and it is the main reason why people get failed in the stock market. You should start everything from little, as you grow you can increases.
First, save some money from your existing income or any from other ways. You can also minimize your expenditure and save money from it and later on you can invest that money in the stock market.
As I already mentioned in previous tips, first know your financial baggage then invest in the stock market. If you can’t recover from that risk in case of losing money in the stock market, do not invest your money there.
Never, go on risk until and unless you do not have any backup of money. And as you start getting profit from the investment, save some money side and keep the backup.
4. Learn from Successful Investor And Implement It
The biggest myth about the stock market is that it is about luck. But, it is not right. Without a proper guide or knowledge about the stock market, you must not start investing in the stock market.
If this is the case, you will lose all your money. The market value of the unit can be increased or decreased, it depends on the market and that stock which you purchase. The stock market is about learning, strategies.
Warren Buffet, I don’t think that I need to introduce this great personality. He is the most successful stock investor. Learn about his life, his tactics.
Learn how he chooses his stocks, what stocks he chooses, when he chooses his stocks. And implement the same thing while you will invest your money in the stock market.
There are many books for the stock market that are published by great stock market investors which gives you a complete idea about when to buy and sell a stock. Now, the books can be traditional ones it means offline or can be online.
It depends on you which one you want to choose. If you do not have a habit of reading then you can also purchase online paid courses in which you will get a complete guide on the stock market.
5. Begin With Equity Funds
In the previous step, But, if you do not have enough knowledge about the stock market, you can also begin with an equity fund.
In the previous tip, it is already mentioned that you must have knowledge about the stock market before start investing in the stock market.
But, if you do not have enough knowledge about the stock or you do not know how to invest in the stock market, there is another option, you can start investing your money in the stock market.
What is Equity Funds?
The Equity fund is an investment cycle where many investors invest their money to earn returns on their capital over a certain time of period.
But, it is mentioned in their policy that there is also a risk. You can lose your money their also. So, research thoroughly and go with a good Equity fund.
How do Equity Funds work?
Equity Investment Funds are managed by professional peoples where they invest your money in different ways like stock, commodities, and bonds.
These all funds are grat example of diversification of money. All these funds diversify the investors money into different companies instead of investing in one or two comapnies.
As I already tell you equity funds also have the risk of losing your money. It depends on the equity funds market price, it can also be dropped below the price that you may have paid.
But, this risk is very low as compared to the investment of any individual person. Because when an individual invests their money in the stock market, they invest in only very few or limited companies. But when funds invest their money, they invest in different companies that reduce the risk of losing the money.
Best Equity Funds
It is very important to choose the right equity funds that are managed by the best professional investors and that doesn’t run away with taking your money.
- Delaware Smid Cap Growth Institutional
- American Century Focused Dynamic Growth Investor Class
- Lord Abbett Growth Leaders F
- Alger Small Cap Growth I-2
- Fidelity Series Growth Company
- Baron Fifth Avenue Growth Retail
- BNY Mellon Sm/Md Cp Gr I
- Alger Large Cap Growth I-2
- PGIM Jennison Focused Growth R6
- Hartford Growth Opportunities HLS IA
6. Open Online Investing Account With Low-Cost Service
To start investing in stocks, one must have an investment account. You can go offline or online but my personal experience is good towards online because it is easy to access or everything is transparent here.
It is a brokerage account where all the trading that is buying and selling of the stocks will be done. But, one must choose a low-cost service account.
Now, you have two options whether you want to work yourself like choosing or buying individual stocks or just investing money and everything will be managed by an advisor. Let’s discuss this briefly.
Begin Stock Investment With Robo advisor
Robo advisor is an investment advisor who helps or advises you to buy and sell the stocks. Robo advisor is a very low-cost service advisor and one of the best investment advisor.
This is for those types of peoples who know that stocks can be a great investment but they do not know how to manage this all or they just want someone else to manage this all.
You have to deposit the amount of money that you want to invest in stocks and then Robo Advisor uses that money to invest in stocks, bonds, and commodities.
These Robo Advisors have different fees on trading. These Robo advisors have some of their pros and cons also. There is also a restriction that you have to a minimum this amount of money.
Taking an example of WealthFront, they have 0.25% fees and you must have $500 to start investing with Wealthfront. On the other hand, Interactive Advisors have 0.08-1.5% fees per year and you must have $1000 to start investing with interactive advisors
It depends on you to start with which Robo advisors if you can accept their cons and happy with their pros you can go with that one. But, here some of the best and latest Robo Advisors are mentioned which can help you to manage and invest money.
- Interactive Advisors
- M1 Finance
- Personal Capital
Other than this you can also try other automating investing app like Acorns and Sofi automated Investing app.
But before choosing any type of Robo advisors, it must have qualities that are mentioned below.
- Portfolios must contain individual stocks
- It must have a quick and easy setup
- Must provide online chat for prospective customers or existing clients
- Cash management accounts should available
- A little help for financial planning should be there
- Low service fees and the starting amount of money should be also given low
Start With Online Stock Broker
The contradiction of Robo advisors, you can start trading yourself. Robo advisors suggest you where to invest your money. But, you can individually choose a stock, buy it and sell it when you want to do with the help of an online stockbroker.
But, before starting the journey of the Stock Market, gain sufficient knowledge of stock market. Managing your investment your money yourself has lots of benefits like you can do your investment independently.
Many of the online stock brokers already available in the google play store, you can even download them and give a try. But, some of the best online stock brokers are mentioned below.
All the stockbrokers that are mentioned below are good, each has its pros and cons, it depends on you which one you want.
TD Ameritrade is the best online stock broker, it is #1 in overall stockbroker. TD Ameritrade helps you in stock trading, learning about the stock market, researching about the stock market.
It has wide selection of investment choices, interactive courses and webcasts, free powerful trading tools and platforms, dependable and supportive service.
TD Ameritrade introduces Commission-free trading. It offers $0 commission on online mobile stock trades, 0$ commission on online exchange-traded funds, 0$commission on online option trades.
TD Ameritrade provides customized dashboards to every investor. It offers an Alexa Skill, it integrates with Facebook Messenger, embracing the future of artificial intelligence (AI) with its chatbot. Stay up-to-date on the latest financial news from Yahoo! Finance in the customizable Dock
But, there are now only contract fees of 0.65$ and no assignments or exercise fees.
TD Ameritrade gives you free access to real-time streaming quotes, access to practice trading platform using historical and current market data.
It has quick live support. It has the ability to make options, futures, and forex trades via the mobile app.
Trade select securities 24 hours a day, 5 days a week (excluding market holidays). With 24/5 trading you can trade on your schedule and take advantage of more potential market opportunities.
TD Ameritrade has the ability to make options, futures, and forex trades via mobile app. It creates pre-defined covered call strategies that automatically roll forward.
Fidelity is the online stockbroker. In the 90s, it is known for the funds but now Fidelity is the diversified online broker. It provides lots of features to its investors. Fidelity is both a Robo advisor and stock online broker.
Financial planning is the biggest problem while doing investment, Fidelity helps you in financial planning in any complex financial situation.
Just like TD Ameritrade, Fidelity also provides you no account fees, with $0 commission you can easily start your trade and there are no account minimums to open an account in Fidelity.
Fidelity has various features and advanced tools which make it best. It has a real-time data option where you completely get information about the market in every second. Fidelity has 20 years of historical data so that you can see the history of the market.
Fidelity has a program called Fidelity Go. It is the Robo Advisors that has digital investment management which helps you in growing and making your profit.
Fidelity has personalized coaching along with Robo advisors. In personalized coaching, they will make you able to do investment on your own and you will start making lots of profit in the stock market investment.
Charles Schwab is another online stockbroker. It also offers $0 online equity trades so that everyone can start investing in the stock market.
You can access Charles Schwab by its mobile or you can just search schwab.com/brokerage. Charles Schwab provides you 24/7 support by making a call with financial professionals which can help you start investing.
You will get various types of online tools and resources from which you can plan about your investment, goals, and financial plan. It has a trading education program from where you can learn about trading.
You must visit that program and learn about the trading if you do not have knowledge about the stock market and trading. You can also plan and invest with an advisor to get grow in your profit. Schwab Mobile App has a rating of 4.5 stars in google play store and millions plus download.
Robinhood is an investing app. Just like other apps, it also gives commission-free trading so that you can easily invest your money. It is not limited to the stockbroker.
In Robinhood, you can also do cryptocurrency purchasing and selling. Tap into the cryptocurrency market to buy, HODL, and sell Bitcoin, Ethereum, Dogecoin, and more, 24/7 with Robinhood Crypto.
Cryptocurrency purchasing and selling are also commission-free. You can also learn about the market from the Robinhood Online StockBroker App.
The best part of the app is that you will get 0.30% APY* on your uninvested cash and get more flexibility with your brokerage account. So without investment also you will earn money, isn’t it amazing?
This feature makes the app more perfect because this feature is available in only a few of the online stockbroker and Robinhood is among one of them.
You can also access real-time data which helps you in investing the money. You can set up customized finance news and notification to stay on top of your assets and you can see all stock market trends with the help of finance news. Controlling the flow of info is up to you.
TradeStation also provides commission-free* equities trading with its award-winning trading technology.
With Trade Station, you get access to more than 2,000 commission-free* ETFs. Also, you get all the trading tools that help you in investing.
It diversifies and invests your money in various mutual funds approximately 2000 funds. There is also the option of trading different cryptocurrencies like Bitcoin, Litecoin, Ethereum, Bitcoin Cash, XRP, and more than 7+ currency pairings
It also gives you the option of trading futures contracts on indices, gold, Euro, crude oil, bonds, and many other futures contracts. You can direct chat with the financial advisor online 24/7.
Trade Station App has 4.3 stars in google play store. The complete history and data of the market are available in the trade station app from that you can easily analyze that information and start your investing at a different level.
Interactive Broker is an online stockbroker. It is a UnitedStates based brokerage company. Its support and quick chat are super fast, you can easily start a conversation with its professional financial advisors.
It invests globally in stocks, options, futures, forex, bonds, and funds from a single integrated account. Interactive Brokers diversify your investment globally.
It offers high interest paid on uninvested cash balances and provides extra income on your lendable shares. Interactive Brokers has leverage technology to start your investment smartly.
Interactive Brokers Spot market opportunities, analyze results, manage your account, and make better decisions with our free trading tools. It also offers real-time data on the market that helps you in investing your money.
It has various types of trading tools that help you investing your money in an innovative way.
E*Trade is the most trustable and experienced online stockbroker. E*Trades also offers a $0 commission trade.
It is a fully united states based company which offers you $0 commissions on online US-listed stock, ETF, and options trades, plus 65¢ per options contract and when you make 30+ trades per quarter and you will pay just 50¢ per options contract.
You can all prices by just visiting the E*Trade official website. E*TRADE has the best and numerous trading tools which will surely help you in your investment and growing your profit.
It has provided step by step blueprint which can help you in learning the stock market investments. It diversifies your money by investing it different stocks, bonds, funds, and much more.
You can customize your portfolio easily or just get a prebuilt portfolio. It also provides the latest market news just like other online stock brokers.
7. Know the Best Time for Buying and Selling the Stocks
It is the most frequent question ask related to the stock market that what is the best time to buy and sell the stocks. Now, this is going to be revealed. The best time of market does not depend on any single factor.
There are lots of factors that affect or reveal whether the market is good or not. PE ( Price to earnings ratio ) is one of the factors that decide whether the market is good or not.
It is a very important key for getting success in stock market investment, and people who got success in the stock market already know about it. PE Ratio is the ratio of market price per share and earning price per share.
When the market price of a share is low, PE Ratio is also decreased and it means it is a great time to buy lots of stocks but before that, you must investigate and research the company whose share or stock you are going to purchase.
Because when the market value of the share of any company is decreased then it can also be a bad sign, maybe the company is going to die or maybe going through any financial crisis. You should first know the financial status of that company before buying its shares.
And when the market value of share goes very high, PE Ratio is also decreased and it means it is a great time to sell your stock which you all bought during the low PE Ratio value. In this way, you can easily buy and sell your stock and start trading.
For getting the value of PE Ratio, you have to just type “pe ratio of (company name whose stock you are going to buy or want to sell) and you will get the complete history of pe ratio of that particular company and you can decide whether to sell the stock or buy more stocks.
8. Never believe in Rumours and copy someone else
The biggest mistake done by most of the beginner stock investors is that they listen to the Rumours and not only listen but also start to believe in it and start going on the failure path of investment.
Some of them just copy other persons if their neighbor, friends, family, and relatives bought any particular stock then they also purchased that same stock again without doing any research and without getting any advice from successful stock investors and then, later on, say that Stock Market is waste we can’t earn money from that.
Then why the lots of expensive books and courses are published, why people are investing their money and precious time to learn the tactics of share market.
Do proper research about the market and company then only buy the stock if you don’t know about the market then there is another option also you can invest in Mutual Funds, it is also a great choice but doesn’t buy the stocks just hearing that someone else doing the same then I will also do that.
9. Don’t Wait for Time, Make the Time Your
The main secret behind Warren Buffet is that they never wait for the time. They never try to wait for a good market. That is why they never get failed in stock market investment.
Warren Buffet has more than sufficient knowledge about all stocks and even to the individual stocks. So, are you still waiting? Why and for what? Starting investing in the stock market now.
A newbie investor is always waiting for time to get the market down and they always got waited and other people earned lakhs of the dollar in that time period. Do wait that is okay but waiting for a long time is never worth it. Because nothing is precious than our time.
Nobody has gotten the success in finding the right time or time to get the market. Starting your trading now, if you will implement the things in the right way you will get success and profit.
Actually, catching up and down of the market is a myth, because no down is actually down, and no up is not actually. And in catching up and down, more people lost their money instead of earning money.
Does anyone think the market will go down this much during the time period of coronavirus pandemic? No, no one thinks so this is not also the down of the market. Even, there will no extreme down and up in the market.
10. Diversify Your Stock Market Investments
Without diversifying your money, you can’t call yourself an investor. Diversifying is the last and the main step in the journey of your investment, in order to protect your investment from market crashes, you must diversify your money.
It looks very difficult but it is not, you just need the proper guidance. Normally, people save their money in the bank instead of investing in funds and the stock market because of the high risks associated with investing.
Depending on the only single source of income that can be very harmful to you in the future. You can individually diversify your money in different bonds, commodities, and stocks.
You have to pay trading fees while buying and purchasing the stocks or you can invest your money in index funds and mutual funds. Investing in mutual funds and index funds has also high risks.
When you don’t have enough knowledge about the stock market then mutual funds and index funds are the right choices for investing your money.
Before going to invest in the stock market you must know that there are two types of stocks in the market. Many people get confused about which stock to buy, let’s know what are those two types of stocks.
Types of Stocks in Terms of Time
To diversify your money, you must know different types of stocks so that you can invest your money in different stocks.
Let’s know what are the types of stock in terms of time.
Long Term Stocks
Long Term Stocks gives you a return after a long period. Buying a long term stock has its own benefit. No tax is applied to it. But, that stock should be sell after 1 year of holding from its buying date. You should only buy these stocks when you do not want a return in a few days and months.
Some of the best long terms stocks are listed below. These stocks are best forever like it is not for any specific time when the market was down or in any crisis. Only the names are mentioned below you can thoroughly search about them on google on any specific stock that what its market is saying.
Recently, Domino’s Pizza (DPZ) has beaten the stocks of Apple and become number one long term stocks
- Domino’s Pizza (DPZ)
- Amedisys (AMED)
Short Term Stocks
Short term stocks are different for everyone. For some people maybe this type of trading is for 15-30 days, for some people it can be of 1-2 months.
Many of the people buy these types of stocks for the morning and sell them in the evening on the same day. It depends on the investor and investor’s psychology.
You just have to monitor the market of that stock when the market value is very low, you should just purchase it, and when the market value goes very high, you must sell all your stocks which you are already purchased.
You can earn lots of money from short term stock also but you have to invest quite more because more you invest, more will be the profit but again more will the tax charges.
But you have to pay 15% short term capital gain tax in short term stocks.
Some of the best short terms are mentioned below, you can check them.
- IQvia Holdings.
- Las Vegas Sands.
- NextEra Energy.
- Procter & Gamble.
Now, it depends on you to buy whether long stock or short terms stock. I have already explained both of them, it depends on you to start with which one.
If you personally ask my recommendation then there will be a little more favor towards the short terms stocks because it is my thought that we will get more profit in short term stocks and I have already earned from it.
I simply look over the history of the company whose stock I want to purchase that when theirs market share value goes down or up and when it is on down I just quickly purchased some shares of it and on the same day when the market value of that share goes up I sell them and in this way I do my trading.
Knowledge of stock market is ocean, it’s very huge. To get success in the stock market, you must keep learning about stock market, do virtual stock market practice.
Read lots of books about the stock market that are mentioned above. These all 10 things are very important to know before investing in the stock market.
Did I miss anything?
If you want to add any other points in these 10 important things for investing in the stock market, please let me know in the comment section.