7 Stock Market Investing Tips For Beginners

Finance, Planning, Stock Market

When you face the stock market for the first time there are a series of preconceived ideas that it is important to avoid so that you can succeed in investing your money without losing it and that you think that the stock market is for those who are lucky, have money and is full of speculators, which is not false and does not have to be bad. Precisely the stock market, investing intelligently, is one of the ways to multiply your savings in the long term. I have talked about multiplying your savings in the long term, not about getting rich in less than a year by investing 1000 euros a month.


1. How to play the stock market

This is one of the preconceived ideas in society about the stock market: that it is a game. And surely if you are in your beginnings and you have said that you want to invest more than one person will have labeled you as crazy for wanting to lose your money playing in the stock market. The stock market is not a game. It is not the place to bet on the rise or fall of a stock or to invest following the advice of people with good marketing that promise you profits with little risk. We recommend you not to use the stock market as a casino where you win a lot or lose everything and to be very careful with the advice of others. If you still like the adrenaline of betting on the stock market as in a casino or sports betting, do not use more than 10% of what you had planned to use in investment.


2. Invest in the stock market for the long term

The way to play the stock market and make money is by investing for the long term. Not everyone has the stamina to wait years for your savings to multiply, but this is the only way you will not lose a significant part of your money. Of course, the long term is no guarantee of success but if you invest in the best funds and stocks for the long term it is difficult to lose money. Here you can see what we consider to be the best mutual funds this year.


In addition to the patience you will need, it is important to know how to withstand the ups and downs and periods of irrationality that occur in the stock market. When the crisis and panic hits, the stock market plummets without distinguishing between companies that deserve to go down and those that do not. If you are confident in your shares or investment funds, it is time to hold on or expand, but if you are playing the stock market or investing according to what you are told and without conviction, you will want to take it all out before losing more.


3. If you want to invest on your own: Learn accounting

If you want to invest on your own, you will need accounting knowledge to know how to value companies. The problem is that you will need many hours not only to learn how to value companies properly but also to monitor your investments. For a beginner investor, we do not recommend that you start investing without the necessary knowledge. It is better to have your money managed by professionals in the sector with years of experience and low commissions.


4. Read investment books

Continuing with the previous point, whether you want to know about accounting or the world of investment, read books to learn about the history of the stock market and learn about it, to expand your knowledge on how to choose a good investment fund and above all to have financial culture and not be fooled by your bank or anyone with a good marketing.


5. Learn from the mistakes of others

With training and reading books, take note of every mistake other investors have made in order to avoid them. In the end it is inevitable that you will have to go through some of them to realize it, but as much as you can, try to avoid them. It doesn’t matter that others are getting rich faster than you. Don’t make mistakes because of it.


6. Diversify

Whether you invest in mutual funds or stocks, always diversify. If you invest in stocks, do not invest in the same sector or country. Nowadays it is easy to invest in various parts of the world. Buy defensive sectors for times of crisis and avoid cyclical sectors.


7. Delegate to others who have more knowledge and a professional track record.


We have mentioned this in several points, but it seems to us to be the most important advice for a beginner. There are many bankers, traders, brokers, among others, hunting for your money and who are not interested in making you earn but in charging you commissions and courses with which you will continue to lose money.


Spend your time investigating the fund managers, their profitability in the last 5 years, the commissions they charge, penalties for withdrawing your money before one year, etc. With a good selection work, you will be able to sleep peacefully at night and better cope with the hard moments of stock market falls.


By following these tips you will know how to invest in the stock market for beginners.

Share this