Who has not ever thought of investing in the Stock Market? The proliferation of stock market news in the media and the promise of big profits continues to attract many small and medium investors . However, before launching into the world of the Stock Market, it is necessary to take into account a series of basic tips.A minority may have some form of financial training, but the vast majority are ‘newbies’ entering the world of active money management for the first time. For this reason, before placing the first purchase order, it is advisable to take into account a series of principles that can serve to avoid unpleasant experiences or repeat mistakes that other investors have already made .
1- How much money do I invest? Just the one you don’t need
This is perhaps the most important rule of all and is the question any investor should ask themselves before they even begin to learn about trading. The market is not a rosy world and it is more than possible to end up losing the entire investment. We must be aware of this possibility and assume that it can happen, so we should never invest what we can or will need in case of an emergency. Define your goals
You cannot enter the market ‘to see them coming’.
You must be clear about what you want to achieve beyond the obvious answer: ‘earn money’. It is about calculating the profitability that you want to obtain, the term in which you want to achieve it and the risk that you are willing to clct stock. The three variables must be aligned, because you cannot expect a double-digit return, say 20%, without taking risks. Obviously, it has to be a reasonable goal and to be able to be numerical, that is, a percentage of the money invested. The most diffuse objectives such as surpassing the Ibexcan be confusing, since their profitability is constantly changing to begin with. The important thing is to forget about the progress of the markets and focus on making the money you have put into play profitable.
3- Invest for the long term
The term of the investment will be in accordance with your personality, but you must bear in mind that to operate in the short term, greater knowledge and experience are necessary than to do it in the long term. In this sense, it is convenient to look at the long-term return, which is the one that should count when carrying out your operations. Thus, you should buy companies that fit that goal. If, for example, you have decided to obtain 10% in two years, you will have to look for titles that adapt to that premise. In addition, trading short will increase the number of commissions that you must face and therefore your profit will be lower.