Stock Market Investing
Presented by Kristen Smigelski, CFP®, RICP®
Are you ready to start investing? Investing in the stock market can be particularly rewarding, but not without risk. If you’re particularly risk averse, you may want to consider another method of investing, or start the investment process slowly. This can also be true for older potential investors who do not have the time or inclination to wait out a downswing on a stock.
But if you’re fresh out of college, or younger than 40, the stock market can be one of the best ways to invest your money, particularly if your goal is to save for retirement, as you’ll have plenty of time to ride out any dips, as well as better gauge overall stock performance over a long period of time. If you’re still on the ropes about getting started in the stock market, here are a few tips that may help:
- Do your research. What does the economy look like right now? What about long-term? While there is no crystal ball that will tell you whether your investment will pay dividends or lose its value altogether, you can learn a lot by starting to pay attention to the health of the current market. Find out how stocks are trading, and what stocks are earning dividends and use that knowledge to make better informed decisions about where you want to place your money. You’ll also want to be a bit more cautious if you hear talk about a looming recession. While most stocks perform adequately and rebound nicely when the economy recovers, it may be best to be cautious if you’re just starting out.
- Tread slowly. Start with a stock that has a history of performance, even if the growth rates are slow. Purchasing a blue-chip stock, for instance, can help you build your confidence, and give you the enthusiasm to start building your portfolio with other stocks.
- Diversifying your stock purchases can help balance out your portfolio help protect you from the full effects of a market dip in a particular industry. For instance, if all of your money goes towards purchasing technology stock, should the tech market drop, all of your stocks will be affected, instead of just a few. Look into various areas that you are interested in and invest in those.
- Hold onto your stocks. While the market can be volatile at times, riding out the volatility is much more important than repeatedly buying and selling. By making a commitment to retain any stock purchased for at least five years, you’ll have plenty of time to see its true value and performance. That five-year time period will also provide enough time for the stock to recover from any market dips.
- When purchasing stocks, consider other types of investments as well. Certificates of Deposit, Treasury Bonds, and other low-risk investments can help balance the roller coaster that the stock market can be. By investing some of your money in these low-risk areas, your portfolio will be better balanced, and at least some of your investments relatively risk free.
- Talk to an investment professional. While many new investors turn to robo-advisors when purchasing stocks for the first time, it can be immensely beneficial to speak with a financial management professional, who can guide you through the intricacies of investing. Make the time for an initial consultation. It will be time and money well spent.
Doing your research, speaking to a financial management professional, and building your portfolio slowly will give you the confidence to invest wisely.
*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 2023 Advisor Websites.