For many people, switching from traditional savings to investing stocks seems like a giant step, especially risky. However, this is not necessarily the case.
Investing is the best way to make your money grow over time. Yes, investing means taking risks, but in exchange for a potentially higher long-term return than traditional savings products can offer.
And as a beginner investor, you don’t have to invest all your available capital. Start carefully with small amounts, monitor stocks real time, and give yourself time to become familiar with the vagaries of the stock market and investing in general. Once you are confident, you can start investing more significant amounts.
What you need to know to start trading
If the investor chooses to buy stocks directly, he will manage his stock portfolio, deciding alone which stocks to buy or sell. This strategy is time-consuming and involves keeping informed about stocks live and economic activity in the broad sense and the activity of the targeted companies in particular. A share is only a part of the capital of a company. Buying shares is equivalent to investing in a company and thus receiving dividends if it makes profits.
Where to start?
What are the most important things to consider if you want to get started in investing? Even if you’re not convinced yet, this section is worth reading.
Determine what you can invest
The first thing to do is determine how much of your savings you could easily do without over the next five years. People often overestimate how much they think they need. Ideally, you should put a cushion (at least six times your salary) in a savings account and a pot of money for expenses you expect to incur within five years.
Take small steps
You don’t have to jump into the deep end immediately. It’s best to start with a limited amount of capital. That way, you’ll learn to deal with the downside – and upside – of the stock market, the intermittent market corrections, and you’ll automatically gain the experience necessary to make investing a positive experience.
Why start small?
The reason we recommend you start investing a small portion of your savings is psychological. One of the biggest challenges for a novice investor is to get used to the fluctuations of the financial markets and their impact on your assets. The best way to get used to it is to do it gradually.
With such a controlled approach, investing can be a healthy experience without fear of large capital losses. And over time, you will find that diversified investing is an attractive way to grow your wealth despite periodic declines and losses.