Getting Started in the Stock Market
Investing in the stock market can be rewarding, but it's not without its risk. While most investors understand that market volatility is a given in the stock market, for those trying to decide whether to invest in stocks, the volatility alone gives them pause. A lot of people are too risk averse to be comfortable investing in the stock market. They want a sure thing when it comes to investing their hard-earned cash. Unfortunately, a sure thing that also offers dividends is non-existent.
For those in their 20s and 30s, investing in the stock market can be a reasonable place to start, as their age could allow them to ride out the dips that inevitably occur.
If you’re hesitant, but still interested in investing in the stock market, here are a few tips that may make investing a little easier and allow you to sleep a little better at night:
- Start slow. The key to doing anything that you’re nervous about doing is to start doing it slowly. The same goes for stocks. Once your comfort level increases, you can add a variety of stocks to your portfolio, but to get your feet wet, purchase shares of well-established mutual funds that hold shares of stock in companies you favor.
- Adopt a long term approach. If you’re in your 20s or 30s when you start to invest, time may allow you to weather the typical ups and downs of the stock market. Holding stocks for at least five to seven years has typically allowed enough time to recover from recessions and low stock prices.
- Be sure to diversify. While stocks can play a major role in any portfolio, it will ease your worries considerably if you make sure that you diversify your portfolio, ideally with a mix of mutual funds, stocks, bonds, real-estate holdings and short-term investments.
- When you start to invest, you may want to consider investing in a CD as well. CDs or Certificates of Deposit are typically offered by financial institutions such as banks and are also offered by investment firms. CDs offer a specific amount of interest on monies deposited. While accumulating significant wealth using only CDs will take some time, the guaranteed interest rate can bring you some peace of mind. For further peace of mind, purchase CD’s that are insured by the FDIC (for up to $250,000).
While there are a number of investing options available today for those with the means to invest, the stock market can provide a solid portfolio for the future. And while the stock market is certainly not for everyone, those that have the resources available can certainly benefit from investing early and not over-reacting to periodic dips in stock prices.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2019 Advisor Websites.