Invest in Shares: Shares are one of the most attractive trades today and are sought after by various types of traders. This is also a top choice for beginners to start with and for experienced traders, to stick with. So no matter what type of trader you are, or what experience level you hold, this trade is always a good one to consider.
But since you’re here, we assume you’re a newbie in shares and want to venture into it more! Well, we’ve got you covered! In this article, we’ll be guiding you through how to trade shares, check it out below:
1 – Educate yourself about the fundamentals of shares
Before investing in any type of share, you must educate yourself first. This is essential since this will be the root of your investing journey with shares, so make sure your “root” is strong. What you can do is learn about the (1) basics of the stock market, (2) the risks involved, (3) the types of shares, (4) how it works, (5) good companies to invest in, and more.
Also consider learning about financial ratios, investment strategies, and how to analyze a company’s performance. Once you’ve fully understood the basics of shares and its complexities, you can move on to the next step.
2 – Choose how you’d like to invest
There are 3 main ways to invest in shares and each one of them holds different processes and also may hold different outcomes. So we’ll be listing the 3 main ways below and you can pick out which one might work for you best:
- I want to invest on my own
If you want to manage and invest in shares on your own, this is possible with the use of brokers. All you have to do is pick out a reputable broker and you’re good to go. But, choosing a broker isn’t that easy. To help you know what to look for in a broker, here is a rundown of great traits to keep in mind when choosing a broker:
- Offer the market you have in mind and more. Better yet, a broker that specializes in the market you’re interested in
- Abides by all licensing and regulations
- Offers a demo account
- Allows you to choose an account type
- Has low transaction fees
- Has good customer service
- Is a breeze to withdraw and deposit from
- Offers quality trading tools
- Is compatible with different software and devices
- Is reputable and trustworthy
- I want an expert to manage my investments for me
For this, you can consider trying out robo-advisors. These are automated financial advisors that help traders manage their investments by providing algorithmic trading without the need for human interaction. Plus it only requires a low fee! Most big brokerages and independent advisors offer this service, so consider it if you think this is what will work for you.
- I want to invest in my workplace 401(K)
This is arguably the most popular option for new investors to get their start. Since many plans give a match, this is rather accessible if you happen to have access to a 401(K) offered by your work.
Company matches are essentially free money. For example, if you make $100,000 a year and your company matches 4% of your contributions to your 401(k), they will match your contributions up to $4,000 as well. That implies you receive $4,000 at no cost.
3 – Set a financial goal
Setting a specific financial goal; which can be a long-term or a short-term objective, is an essential next step after deciding on your chosen investing strategy. This crucial phase of financial planning is especially beneficial since it allows you to carefully lay out your overall plan. It guides you through the complexities of your financial environment like a guidebook.
Setting particular objectives that can be measured gives you the ability to make well-informed decisions that support your overall financial vision
4 – Create a budget
Now it’s time to create a budget but first things first, assess your financial situation. This is crucial since you might end up wagering more than you can afford. So identify how much money you’ll be able to afford without compromising your essential expenses like bills, rent, mortgage and even your daily costs.
5 – Make sure you have an emergency fund!
If you may not already know, trading is pretty risky. So make sure, before you invest, have an emergency fund to fall back on when things turn south. An ideal amount would be a number that could cover around 3 to 6 months’ worth of living expenses. So before you invest, consider setting up your financial safety net.
6 – Diversify your portfolio
When trading, a great way to have higher chances of gain and lower chances of loss is by expanding your portfolio. So avoid only investing in a single stock and diversify your trades, but make sure you only take on trades you can handle.
By expanding your portfolio, you’re mitigating risk across different sectors, geographic regions, industries, and so on.
7 – Start out small
To make sure investing in shares is for you or not, consider simply trying out the waters. Start small to not put so much money on the line on your first time. You can start to increase your capital when you gain experience, confidence, and an idea of how shares work.