Guide For Beginners For Buying Stocks

Buying stocks means buying small part of the company in which you are investing. Almost 20 years ago the stocks were used to be bought with the advice of brokers only. But now the trend has changed and anyone can buy stocks with the use of a computer, or stock market. The stocks can also be sold either in the stock market or online. If you are the new one to buy stocks then you might be overwhelmed but with a little knowledge regarding stocks you can make a lot of money from your investments. The following is the detailed guideline for buying stocks for beginners.

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Setting Goals

Being a beginner in the stocks you must think well before investing in the stocks. This is because where there are chances of money making from stocks, at the same time you can lose your money as well.You have to think whether you want to build emergency money or a huge money for future. You have to think of the expenses before you start to invest in the stocks. Therefore, you must first build a motivation and if possible then quantify your motivation in dollars. This will define the extent of money you want to make to achieve your goals. For instance, if you are having a mind to purchase a house, you have to make down payments in not less than 40 percent of the total amount. While some people have targeted investment goals, some don’t have specific goals. The goals are varying in time and priority.

Define The Time Frame

The goals of your investments will define the time duration in which the investments will take place. For instance, the longer the duration of the investments, the greater are chances of the positive returns. For instance, if you have a goal to make money for buying a house in the next three years, the timeframe is set to be three years. Now you have to invest in the stocks in companies which you think can give you enough money in next three years to buy a house. But if you are investing in stocks for your retirement plans to be executed after 30 years, then you got abundant time to make money from your stocks.

Understanding Risk

The investments that you make in the stocks are all having risks. There is always the possibility that you will lose some money or even entire money. This is because the stocks are different and there is no guarantee to win money or lose money. The chances are all equal in both cases. This all depends on the extent to which you are able to take risks. Therefore, before making investments you need to be clear of the chances of risk associated to the stocks.

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Calculate The Investments

You can use any of the investment calculators available online to make estimates to your investments. You can calculate the rate at which you will get back your investments required for reaching your goals. For instance if you are going to make money of $40000 in three years from mere $5000 a month. For this you will need to earn form the stocks at rate of 30 percent or more.

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