Dipping your toes into investing can be daunting. I’m not talking about mutual funds, nor stock broker services that take your money and run. I’m talking about placing your own hard earned eggs in multinational baskets of chance and profit-steering that occurs through closed doors.
Note that this article is written in utter simplicity; I’m not a stock professional, merely someone who’s tripled my measly investment using one of the more popular trading platforms over the course of two years, largely from cannabis legalization, solar power and tech stocks. In all honesty, I’ve made many more mistakes than I ought to have, and the amount I’ve tripled really isn’t much but it’s certainly enough to give me a sense of accomplishment and personal achievement — which is what this has all been about to me. You’ll have to ask yourself, too, why it is that you’re choosing to invest.
- Decide the purpose and goal of your investment, then base your style around that. If you want gradual and secure growth, don’t expect any big gains in the short term — so don’t check your account every day because it’ll drive you up the wall and push you towards making some needlessly impatient decisions. If you want big gains in a short amount of time, you’re going to have to play it more aggressively — high risk and high reward, obviously — don’t be shocked if this doesn’t work out for you.
- Be really careful with the transaction fees. I’m fairly certain most platforms now charge a transaction fee each time you buy or sell a stock, though there is a growing movement towards free-transaction based platforms. Nevertheless, the fees ads up incredibly fast if you don’t take them into account. In my fist year, I had easily burned through $300–$500 in transaction fees alone, negating a nice chunk of my growth. My recommendation, even though I don’t seem to be following my own advice, is to keep track of your transfer fee expenses and wait 24 hours to pull the trigger on a buy or sell.
- Patience — it’s much easier said than done. When I started playing around with stocks, one of my first investments involved a few shares of Nvidia and, at that time, the stock was valued around $60 or so if I remember correctly; as I sit here and write this post, it’s currently sitting at a lofty $257.44 per share. Me, being an impatient fool, sold when it hit $80 thinking it wouldn’t go any higher, but more so eager to reallocate my funds for some more exciting investments.
- Don’t buy into all the stock-tip and stock-advisor newsletters; there’s an entire industry, vicious and hungry to sign you up for their expert advice. You really don’t need it as you’re capable of doing your own research and are likely much more intuitive than they are; they simply spew generic trend-based analysis,sensationalized with a sense of false urgency. Don’t fall for it. You have to ask yourself as well, if their opinions held true, life would be much too easy.
- Simple one — don’t put all your eggs in one basket. Try to keep your portfolio diverse enough. Again, this may depend on the type of investing you’re aiming for. You may want to keep it simple and just go all in with one stock but, eventually, you’ll stumble upon some companies that are just too hard to resist a stake in.
- Cross reference each company you plan to invest in. I was shocked at how divergent and contradictory different sources could really be on particular stocks. Research diligently as, and this will happen, you’ll open up a news article the day after buying a large number of shares, only to find out there are some negative prospects that a previous resource failed to illuminate for you. In other words, the media can be exceptionally deceptive in respect to their stock reporting — whether or not this is intentional, the case can be made either way.
- Be weary of penny stocks; they’re incredibly appealing for newcomers (especially if you go in with next to nothing) and once you bite into some, you’ll find more appealing companies, and more appealing options until you see half of your portfolio swimming in penny stocks. They have their own inherent set of risks that I won’t go into detail about in this post, just think twice before you execute on a penny stock and research the risks associated with this type of investing beforehand.
- Don’t discount how much of a role politics, diplomacy and social policy play. Social media has been steadily changing the game as well; at the time of this writing, Elon Musk is spewing out tweets that are sending TESLA stock up and down on a roller coaster ride.
- Lastly — don’t only be in it solely for the money. Although it can seem like the whole point, I had treated it more of a hobby with a potential for some financial growth. Why not take the money that would sit in a mutual fund account, growing by a handful of dollars, when you can have some fun with it, learn a lot about the market, and most of all, learn about the way in which our world works through the industries that you end up inevitably researching. Sure, there’s some risk, but unless you’re completely nonsensical and equipped with horrid luck, you shouldn’t lose more than 15–20% of your overall investment.