Although the stock market is riddled with uncertainty, certain tried-and-true concepts can increase your chances to long-term success.
The first thing an investor needs to do is define their financial goals, such as saving for retirement, buying an apartment or financing your children’s education. This will help them decide how much money they should invest and what type of investment is best for their needs.
It’s also an excellent idea to focus on having an emergency fund in place and paying off debts with high interest before putting your money into the market. Start with a small amount and then increase your investment over time as you become more experienced.
One of the biggest mistakes that beginners make is to try to time the market, Keady says. Keady says that nobody knows when the right time to invest.
If you’re just beginning, you should concentrate on stocks of companies you know. Peter Lynch, the legendary Fidelity Magellan Fund manager, once said that you stand a a greater chance of success if you invest in companies that have a proven track record and growth potential.
Avoid online forums and adverts that promote stocks with a high chance of success. They are usually part of a pump and dump plan, where shady individuals buy buckets of shares of a thinly-traded company to drive the price up, and then sell their shares for their own profit.