But in reality, people who play the stock market or invest in spurious ventures are mavericks who had learned the tricks of the trade and found loopholes and ways to manipulate or twist the system. If not, they have that uncanny ability to use people and their money for their selfish ends.
Yet, essentially, the stock market and investing in general can be a rather straightforward process through which anyone who has the diligence to learn and apply the requisite focus can attain financial security. Here are some commonly applicable tips to follow:
1. Learn the basics of the stock market
Stock market investing requires a great deal of study to get the elementary knowledge and principles of the industry, from understanding shares of stock, risk tolerance and to the various rules that apply in the trade, such as 2% rule in investment management and deciphering market fundamentals, which may sound easy but is really one of the most challenging tasks in the trade.
This task has been made easier with online information on stock market investment. Certain websites even provide free interactive software and seminars on the foundational aspects of the industry; including virtual investing exercises to give you the actual feel of investing and making or losing money.
2. Work with a professional manager
We all need a coach or a mentor to be really good at anything. If you are not that serious about investing in the stock market, you can be like the casual finance student or novice housewife who invests some money in several shares of a company’s stock and monitoring how the shares fare daily without the benefit of a professional manager.
If you have to spend some good money, hiring or consulting with a professional manager will be a good investment in the long run.
3. Learn to recognize a good broker from a bad one
Brokers are people who trade in stocks, meaning they are responsible for selling and buying stocks that are traded in the stock market. A professional manager will help greatly in opening insights into this vital issue. But nothing will prepare you better in real investing than dealing directly with brokers and getting your hands really wet with catching live fish in the sea, so to speak.
4. Determine your risk tolerance level
It is vital to get advice from a professional finance manager as to what your risk tolerance level is. Essentially, it is your capability to take risks based on your particular financial standing: how much money you have, how much you intend to invest, which stocks will suit your goals, how much you hope to gain and how much you are willing to lose in case your investment fails.
It takes experience to know exactly how safe or how risky it is to put your hard-earned money in a particular portfolio. Again, having someone who has that experience will help. But you have to be independently capable of measuring your own vulnerability to risks and losses or, at least, with minimal consultation. Like Warren Buffet, who has spent a big part of his entire life studying the market, you need to start getting a real, working comprehension of the stock market as early as now.
If you feel the stock market is the way for you to go in terms of investing your assets, then there is a way of achieving that goal without risking yourself so much. But as the saying goes in the lottery game: He who wins never gives up; and he who gives up never wins. Perseverance is a good quality to have in aiming for financial security.