Handy Tips for Investing in the Stock Market in 2019
Market expectations in 2019 are not as high as they were at the beginning of last year which turned out to be a bad year for the stock market. Predictions of a very volatile stock market have been made mainly due to the high global debt levels and trade war fears. This has left many wannabe investors fearful of getting into the game.
Considering that genuine stocks go up 70% of the time and the chances of a market crash happening in 2019 are very slim, investing in the stock market makes more sense than sitting out. For the investment newbie, here are a few handy tips for investing profitably in the stock market in 2019.
Active trading vs. long term investment
Once you have decided to invest your money, the first consideration you have to make is your investment goals. Are you looking to be an active trader hoping to earn a fortune very quickly or is your goal steadily growing your investment over a lengthy period?
Active trading involves buying and selling continuously. It takes up a lot of time and energy, but if you can swing it, the profits can be substantial. The risk, however, is immense since predicting the market trends can prove challenging even for seasoned investors. Passively managed portfolios that are updated once or twice a year are less risky and produce attractive returns albeit rather slowly.
Research! Research! Research!
The importance of conducting proper research on your investment prospects cannot be overstated. You can easily find all the information about stock trading from reliable Investors Hangout. As a new investor, this information is invaluable since the stock investment world is rife with niche terminologies. Understanding these terms is crucial when making trades.
Find mentorship
While teaching yourself is commendable, you have a better chance of learning the ropes if you are guided by a seasoned stock trader. A good mentor can be anyone with fundamental knowledge, understanding, and experience in the trade. He or she should offer recommendations on useful resources, respond to your questions, and provide support and encouragement in times of loss. You can also seek the services of a certified investment advisor who is legally required to offer you advice that is in your best financial interest.
Logic over emotion
You should never let your emotions influence your investment decisions. Fear of making losses and greed for quick returns are the two most important emotions that any trader needs to keep in check. Maintain a rational mind and base your decisions on hard facts from proper research and reliable information.
Set your financial goals while maintaining realistic expectations
Investing in the stock market is not a get rich quick scheme. Anyone that tells you different is a liar and most probably a scammer. It is a patience game that involves taking calculated risks which have the potential to blow up in your face. Basing your expectations on your portfolio while accounting for the risks involved can help you manage unpleasant surprises should they arise.
Invest in a business, not a stock
You should never be influenced by a lucrative stock if you know little to nothing about the company selling it. Invest in the business. This means that you need to understand the company, its products/services, position in the market and its competitive strengths and weaknesses. By studying the company’s financial statements, you should be able to project its intrinsic value and future cash flow.