Every journey has a beginning, and for investors, their first step usually begins with the first asset they invest their money in, and this can play a huge role in the rest of their careers.
Oftentimes, however, freshly-baked investors have a hard time finding the right asset to invest their money in, and due to having next to no experience in the market, don’t know the characteristics of a promising stock or an alt asset that’s about to fail.
Thankfully, the internet has become a near-infinite resource of information for investors, and we’ve compiled some data on what you should do if you’re just starting out in the market.
Keep reading to find out more about what you can do to find the right stock for your portfolio as well as what to avoid when making your first move on the market.
Define your goals
The first thing to figure out is why you’re even interested in the investing market in the first place.
For some, it’s an opportunity to generate wealth before they retire, whereas others are looking to either make a quick buck or save up for a rainy day.
No matter what the reason for your investment may be, remember that you shouldn’t invest any money that you’ll actually need in the next 3-5 years, as you should only invest what you’re prepared to lose.
The longer you’re exposed to the market the better, and if you’ve got some long-term goals in mind, your success rate will go up drastically, even more so if you make some clever choices when it comes to the assets you’ll invest in.
The market can fluctuate immensely over short periods of time, so make sure you’ve fully understood how much risk you’re able to take on.
Broaden your views
Oftentimes, you’ll hear some of the more experienced investors talking about having a wider moat when investing, and this is very common with someone like Warren Buffet, who’s built an empire on this strategy.
A wider spread of assets gives you an edge on the competition, as it’ll prevent your competitors from stealing a company’s market share from you, and it can work wonders if you’re just starting out.
This advantage can come in a number of different forms, but the easiest to notice ones are present in today’s market, and you won’t be surprised to hear that META is a great investment just because it’s become practically impossible to stay connected without a Facebook account.
Another great investing option is patenting, and it’s what allowed a company like Blackberry, which hasn’t exactly been participating in the smartphone market lately, to remain afloat.
Know what to avoid
While certain stocks may be a great option for anyone who’s been in the market for long enough, they’re less than favorable for market newbies, as they can make their portfolios spiral out of control, losing them their entire investment.
A general rule of thumb is to not invest in rapidly growing companies, as this growth will eventually subside, leading to volatility.
Instead, you should focus on building your portfolio with stocks from reliable, successful companies, before trying to bet on the next big thing.
Penny stocks, on the other hand, should be avoided by anyone who’s looking to actually grow their wealth, as stocks from companies with a market value under $200 million usually aren’t worth looking into.
Finally, you should avoid investing in anything that you can’t fully understand, as you won’t be able to gauge just how profitable it may be, and if you lose the bet, you’ll be seeing some major losses in your portfolio.
Investing is tough, and with all the volatility in the stock market, it’s not for the faint of heart.
Most beginner investors are pulled in by the immense gains experienced investors can make on a good call, but what they don’t know is just how much money was lost before a profit was turned.
With almost 50% of all companies failing within their first year on the market, it’s tough to make the right call, which is why new investors should focus on already successful companies that have made a name for themselves rather than the underdog.
As satisfying as it can be to watch someone climb through the ranks, your money is on the line, and the last thing you need is to lose thousands on a poor investment that you never had to make.
Focus on your long-term goals and invest in companies whose core values align with yours and that do business in a sector you actually understand.
This will help you have full control over your investments and allow you to increase your wealth tremendously, so long as you stay dedicated and work towards your long-term goals.