Learning to Invest

Learning To Invest
By: www.CandleStickForums.com

Learning to invest wisely takes
time and patience. It will pay
rewards for years to come.
Learning to invest requires that
you start by learning the
terminology and mechanisms of
the stock market, of buying stocks
and selling stocks.

You will need to learn to evaluate
companies whose stocks you want
to purchase and you will need to
learn about market timing. You
will want to develop an investment
strategy.

A dictionary definition of the word
“invest” is “to apply money for
profit” or “put money for profit in
stocks, etc.”

The point of learning to invest well
is to maximize your profit while
minimizing your risk while
investing in
stocks, bonds, Forex, etc.

The balancing of risk reward
rations is important in learning to
invest. Start with stock market
terminology.

Shares of stock represent the
amount of money that an investor
can purchase in order to invest in a
corporation and become one of
many shareholders.

Each share represents ownership in
the company and this ownership
entitles the shareholder to certain
rights such as dividends and voting
rights.

Shares in a company entitle the
holder to a share of company assets
if the company goes bankrupt but
only after primary creditors.

Stocks are bought and sold on
stock exchanges. A stock exchange
is an institution that hosts a
market where stocks and bonds,
options and futures, and
commodities are traded.

It is where buyers and sellers can
come together during specified
hours to trade on business days.

US stock exchanges are the New
York Stock Exchange and the
NASDAQ. One can buy and sell
stocks through a stock broker or
online with a trading account.

When learning to invest it is wise
to have a model to follow, someone
whom you trust and it is wise start
with investing money in small
amounts.

A good piece of advice is to stick
with stocks in companies whose
products you know and
understand or market sectors in
which you have expertise.

For example, a physician may start
using a very effective medicine to
treat his or her patients. The
physician understands that this
medication will become the
treatment of choice for a given
disease.

Stock investing for beginners does
not mean the beginners have no
life experience. Use what you know
to help your stock investing.

Learning to invest should include
developing a long term plan. If you
have a clear idea of where you want
to go it will be substantially easier
getting there.

There is retirement investing, for
example, and there is investing for
short term profit. It is usually wise to
put part of your investment dollars in
a long term investment where the
stock is allowed to appreciate in value
over many years free of taxes which
are only paid on capital gains when
you sell the stock.

On the other hand there are always
short term trading opportunities
where you will take advantage of
currently cheap stocks with the
prospect of fast growth.

The choosing of several different
stocks for several different purposes is
part of portfolio management.
Choosing stocks in different market
sectors is portfolio diversification
which is good risk protection. In
learning to invest start slow, develop a
plan early, and don’t be afraid to make
changes in how you invest as you learn
the ins and outs of the markets.

Learning to Invest

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