Beginners’ Guide To Picking A Stock

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investing beginner

Personally, I got overwhelmed; trying to pick a stock or stocks to invest in. This made me postpone a proper investing habit for 2 years. The most challenging aspect of starting to invest in the stock market is picking the first few stocks to add to a portfolio. Learning how to pick stocks can be very challenging, especially if you are just getting started. This short guide will help you get your portfolio off to a running start. Also, it will show you how to pick your first stocks.

Examine yourself And Set Your Goals

Firstly, you need to decide what your goals are for your investment portfolio. How much risk are you willing to take for years? Are you willing to invest all your cash in very risky stocks with high growth but potential loss, or focus on companies that you believe can be strong in the long run? Also, do you intend to diversify your money among different stocks, or do you want to put everything in only one that you understand? Once you can establish your goals, you’re good to go with a made-up mind.

Patience And Controlling Emotions

A person who feels negative about the market is called a “bear,” while their positive counterpart is called a “bull.” During market hours, the constant battle between the bulls and the bears is reflected in the constantly changing price of securities. When a majority of investors are worried about a company, its stock price is likely to decline; but when a majority feel positive about the company’s future, its stock price tends to rise.

When you buy a stock, you should have a good reason for doing so and an expectation of what the price will do if the reason is valid. The biggest obstacle to stock market profits is an inability to control one’s emotions and make logical decisions!

Trust What You Understand

The best way to start when buying stocks is to buy what you know or understand. You should not try following stock tips or read a bunch of technical analysis that you cannot understand. Basically, you can invest in a company, which you already know of the success in past and recent times. This gives you a big advantage, as an investor. You can see how that company is doing just by looking at their stores and reading normal business news.

Low Risk And Passive Investors

If you are not sure which specific stock to select, you can always invest in mutual funds or bonds of your country. These options may have the lowest returns, but you are most certain of fewer losses. Also, you can always invest in Exchange-Traded Funds (ETFs) and market indices. These products are already diversified for you and will track a specific market for you. And as a Nigerian, you can invest in global ETFs, via the Chaka app.

Conclusion

The younger you begin your investing avocation, the greater the final results. Investing in the stock market is a great opportunity to build large asset value for those who are willing to be consistent savers, make the necessary investment in time, appropriately manage their risk, and be patient. Allow the magic of compounding to work for you!

Please tell us in the comments, what additional tips can you suggest for successful stock market investing?

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