How do I get started in the stock market is a commonly asked question. In answering correctly, we need first to ask a few other questions as well.
One of those questions is what do you want out of the stock market? If your answer is to get-rich-quick, you probably don’t want to get started in the stock market at all. Instead of trying to get started in the stock market, you should buy some lottery tickets or drive out to the casino.
If you want to acquire modest capital gains, you can do that if you get started in the stock market. If you want to build a retirement income, you can do that if you get started in the stock market as well. What you might recognize about these endeavors is that they are both long-term goals. If you want to get started in the stock market, you need to recognize that the stock market represents long-term goals. Day trading is an aberration. Most day traders are not successful in the long-term, and they burn out quickly.
There are other considerations to take into account if you want to get started in the stock market. You will want to consider a long-range plan of investment. In making your plan it is good to decide to invest in companies, areas of business, products, or services, with which you have a familiarity. For instance, if you are an auto mechanic about to get started in the stock market, you might want to invest in automobile manufacturers, after-market auto parts distributors, or tool manufacturers. If you are a plumber about to get started in the stock market, you might want to invest in tool manufacturers, plumbing parts distributors, or in a safety shoe supplier. You get the drift. Even hobbies can lead to investment ideas.
When you get started in the stock market, you will become familiar with the effect of inflation on your earnings. You will definitely want to invest in corporations whose growth outpaces that of inflation.
Tax issues can become a concern when you get started in the stock market. You will need to seek some tax advice if you find yourself having to deal with the Alternative Minimum Tax because of dividends from your investments.
When you get started in the stock market, you need to have a clear idea of how much you can afford to invest and how much you cannot afford to invest. It is a good idea never to invest more than you can afford to lose. As witnessed all too well in recent years, sometimes people do lose when they invest in the stock market.
When you choose a broker to help you get started in the stock market, it is important to know that discount brokers offer very little advice for the uninitiated. Even with higher rates and fees, if you are just about to get started in the stock market, it may be better for you to consider using a commissioned brokerage firm or a financial planner. Since they are earning more money from your investment plans, these professionals are often willing to give advice to someone who is just going to get started in the stock market.