Investing in The Stock Market

Investing in the stock market can be a tricky feat for anyone. In fact, investing in the stock market has produced some of the greatest wealth in our time, and it has also caused people to willingly end their lives because of the misery caused by the stock market. The stock market in general, is a market. This means that is fluctuates up and down and it can never been controlled or predicted accurately enough to reduce risk. This means that you can certainly make accurate guesses, but you certainly cannot predict the future, which is why someone who plays the stock market will eventually get burned.

Investing in the stock market certainly carries with it an inherent amount of risk, but for many people, if properly educated; the stock market can still be an excellent source of wealth and few headaches. This means, that if a person is willing to put in the time to research the stock market to find good quality companies to invest in, that a person can actually be very successful by investing in the stock market. The first trick is to find a good company. Generally a person will not want to put all of their eggs in one basket. This means, that even if you are 100% certain that one company's stock will rise in the next year, that you should still diversify your portfolio to include a majority stake in that one company and then lesser stakes in other companies. This will ensure that you are able to safeguard yourself if for some reason, your certainty turns out not to be true.

One of the best ways to safeguard yourself according to Minny is to invest in between 12-15 different companies on the stock market. This will allow you to have a risk adverse portfolio, and your entire earnings will not be sunk if one company goes belly up. This will mean that you should do your homework and find 12 - 15 companies that you will be confidant to invest your money in. You should look for stable companies that have been established for a long period of time. You should look for companies that have generous dividends, and who are flush with cash. A well-managed company is also a great sign that the company will continue to do well. if you are able to find 12 -15 of these types of companies then you have already beaten out the lion's share of investors.

Once you find these companies you need to begin investing slowly in them. This means that you should take advantage of dollar cost averaging and slowly invest your money over time. This allows you to beat the daily fluctuations of the market and prepare for greater earnings in the future. You are not speculating, you are investing. On that same note, since you are not speculating, you should understand that to be successful in the stock market you need to practice buy and hold investing. This means that you should invest in the companies that you feel will do well, and hold those positions for a long period of time. A long period of times can mean 20 -40 years in some cases. This allows for your stock to truly reach its potential and for you to truly reap the reward of investing in a company that you knew would do well. This is the best way to invest in the stock market, and you will reap the rewards of your efforts.

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