What to Know About Stocks Before You Start Investing

As more and more people begin to face financial struggle, some are looking for ways they can make money from home. This is when the stock market comes into play. Before you begin investing money into stocks there are some tips, tricks, and overall advice that you should know!

1. Nothing is Guaranteed

You may think of some investments as a guaranteed money maker, however that is not always the case. A good rule of thumb to invest in big companies like Disney, ESPN, etc. as opposed to individual small businesses. One will definitely have higher risk than the other but regardless they both never are 100% a certain investment call.

2. Sell High, Buy Low

You may have heard this term before and it’s a pretty simple concept. You want to buy your stocks when they are priced low and sell them when they are priced high. The tricky part is actually figuring out good times to continue to buy and sell.

3. Think About the Big Picture

You will want to hold out for the long term with stocks. In fact, typically speaking whenever investors do short term investing, they will likely be burned one way or another.

4. Understand Filings

Make sure that you keep up to date with public filings that are made with the SEC. This will basically be a portfolio for companies that give details about their finances, risk factors, and more! Another good place to research is the annual 10-k. This data has an even more in-depth look at financials from as broad as annual numbers to as short as quarterly numbers. You will also be able to see descriptions of potential growth opportunities, management, and costs. Likewise, you will be able to see any other personnel changes with regulatory filings. You can see if there are executive changes by people of power within the company!

5. Not Everything is Easy to Track

Unfortunately, there is no magic number that can help people decide whether a trade is a good one or a bad one. In fact, both amateurs and professionals alike will typically measure value from dividend yields, price-earnings ratios, and profit margins.

6. Learn to Love Dividends

If you normally would face a 10% loss in share price, you may only end up losing 2% at the end of the year. This is because sometimes companies pay dividends over the course of 12 months. Even though stocks that have dividends aren’t safeguarded from any price drop, they basically have a safety net that can make the fall less harmful.

Overall

When you begin looking into the stock market you may feel overwhelmed. Luckily, that doesn’t need to be the case. In fact, with the proper time to learn and understand trading in the market, you may be able to start right away. If you have any questions there are also online institutions, and financial advisors that you can call to see what a good path would be for you and your stock options!