If you were to ask a room full of people about the difference between being rich and being wealthy, most of them would probably say investments. It is possible to have a lot of money, say, from lottery winnings or from an inheritance, but not really be wealthy. True wealth is built over the long term and is far more stable than simply having cash. So how does one go about building wealth that can last for generations? The first step for many is investing in the stock market. The stock market for beginners, though, can seem complicated. These investing tips can get you off on the right foot.
Not only can a stock broker save you from making terrible investment choices, they can teach you everything you need to know about investing. Most stock brokers have vital insider information on stocks, bonds and mutual funds that the general public doesn't know about, so they can often steer you in the right direction when it comes to making the right investment choices. They can also help to manage your entire stock portfolio so that you will always know how close you are to accomplishing your short term and long term investment goals. The importance of a broker in the life of a new investor really can't be overstated.
2. - Learn the Lingo!
Do you know the difference between a stock, bond or a mutual fund? Don't worry, most people don't, but if you are going to be a serious investor, you will need to learn what is what so you can work with your broker to make the best decisions for you. There are many different ways you can brush up on the jargon that dominates the world of online investing. There are many investment websites you can visit and books you can read that spell out everything you need to know. Few industries are as steeped in jargon as this one is, so take your time and don't be afraid to ask your broker questions.
3. - Visit the bookstore!
There are very few subjects in the world that have had more words written about it than investing. From the daily Wall Street Journal to the latest and greatest books on the best sellers list, you can really learn a lot from immersing yourself in the world of investing. Ask your broker for a list of essential reads that you can get from your local library or from the bookstore that will give you a basic primer on the world of investing. There are literally thousands of stock market for beginners books out there, so don't be afraid to pick one up.
4. - Learn how to identify risk!
No matter what anyone tells you, investing always carries risk. In most cases, bonds are the least risky investment, followed by mutual funds, followed by stocks, but each and every investment you make does carry a certain degree of risk, and it is vitally important that you learn how to identify the risk an investment carries so you can one day invest without the necessity of a broker. Learning such essential truths as, "you should never invest any money you can't afford to lose" may seem simple, but just like gambling at a casino, sometimes the best investors lose their heads in the heat of battle and make mistakes. It is best to learn those lessons now before they cost you later.
5. - Patience is the key!
Stock market investing is a marathon, not a sprint. The stock market, for beginners, is overwhelming. Very few people make fortunes off of one stock trade. You make bits of money slowly over time and amass wealth over a period of decades, not weeks. Stick with smart trades, and you'll be set for years to come.