You don’t need a degree to buy a share in the market. However, what you do need is a little research and some basic knowledge of how the share market works to ensure you make the best decision possible.
That said, there are a ton of ways to grow your wealth, and share trading is just one of the ways. However, share trading is one of the simplest yet most cost-effective ways to get started, and just about anyone can get started.
So, if you’re here today looking to learn more about share trading to get started with investments, here’s what you need to know:
1. Always Research Your Options
One of the biggest mistakes you can make with share trading is not doing your research. If you don’t fully understand a company and how it works, you shouldn’t be investing in it. The same goes for any stock or share on the market today.
The best way to get an idea of a company is by reading the company’s financial reports. These reports can be found on the company’s website and include things like the company’s revenue, gross profit and more, and the reports will give you a better sense of the company’s health and what it does when compared to other companies on the market.
2. Aim to Have 5 to 12 Stocks in the Portfolio
If you’re new to the market, you may think that investing in one or two shares will be enough to get started. But in reality, you should aim for a diverse portfolio of about 5 to 12 different stocks.
This will help protect your capital in case one of your investment picks turns out to be a dud. But of course, if you do your research, you should feel more confident about the risks you take with each investment you make.
3. Never Invest More than 20% Of Your Capital in One Stock
One of the biggest mistakes you can make with share trading is investing more than 20% of your capital in one stock. Why? Having more than that puts you at unnecessary risk of losses!
By investing 10% in each of 10 different stocks, for example, you’ll be able to prevent your portfolio from being hit too hard in case one of your investment picks goes bust. Of course, if you follow best practices, you shouldn’t have much of a problem with any of your stock picks.
4. Only Invest 10% of Your Capital in Short-Term Markets
You should only invest 10% of your capital in short-term markets. This includes things like bonds and the global market.
The reason for this is that these markets are volatile and can result in losses for uninformed investors. By keeping 10% of your capital in these markets, you’ll be able to get your money back in a timely manner if you need to.
Now, how about the rest of your capital? Those can go to your medium-to-long-term portfolio as it slowly grows over the months and years.
If you’ve ever wanted to start investing but didn’t know where to start, share trading is a simple yet effective way to get started. However, it’s important to fully understand the risks and the potential for rewards with any investment you make, as well as know how to protect your money when needed.
So, do your research, keep your capital safe, and invest with confidence!
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