How Should First Time Investors Invest in The Stock Market?

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There is a famous saying “Be fearful when others are greedy and greedy when others are fearful”. If one is a first time investor he faces a sea of emotions when investing in the stock market. There is excitement at taking the first step .There is greed to double the investment in a short span of time. There is also an unnamed fear of the what if factor. What if I lose heavily in the stock market?

The art of investing in the stock market

Buy stocks in small quantities

  • A journey of a thousand miles begins with a single step. If one is a first time investor he needs to start small (small sums of money) or use a demo portfolio available online to get a feel of investing in the stock market.
  • One gets a feel of investing using the demo portfolio and gets an idea of the stock price movements as well as the returns these shares generate over a period of time.
  • This gives one confidence to put in his hard earned money into stocks albeit in small quantities.

Set your finances in order

  • One should invest in stocks only out of his surplus and not his children’s education money or the family food cash. The school can’t wait till one collects cash to pay the fees and one has to eat every day.
  • One should pay off all debts before investing in the stock markets. Remember “ A small hole can sink a great ship”. Debt is basically spending tomorrow’s money today .Clear all debts before investing in the stock markets.
  • Before investing in the stock market one needs to set aside money for his living expenses. An emergency fund needs to be created for at least 6 months worth of expenses for say a medical emergency.
  • One must invest only money he can afford to lose otherwise it would be difficult to sleep at night.

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