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Investing As An Amateur: How To Learn Best Practices

It’s easier than ever to start investing. In an age of “get that hustle”, it’s very appealing to store your money somewhere where it can make more money, practically hands-free, and apps and access to like-minded communities cultivate this interest and impetus.

But investments are a risky thing to venture into for the first time. This is your money we’re talking about and, as we’ve pointed out, you need to keep hold of it.

Therefore, you have to be sure what you’re doing with your money is the right move.

smartphone with stock green chart

This is where our guide can help you out. Investing as an amateur can get overwhelming.

There’s a lot of conflicting information out there and a lot of tips and tricks.

We’re looking to collect it all in one easy-to-use guide. Read on to find out how you can learn to invest wisely and confidently.

Look For Good Companies, Not Hot Stocks

It would be easy to look at the stock market, see something on the rise and decide you want a piece of that, but if investing was that easy, no one would be making any money.

Those hot stocks are likely to fall apart again quickly, leaving you out of pocket.

Instead, you should be looking for companies that will last.

Start small and go for safe shares in companies. They’re easy to understand, easy to buy, easy to trade and if you choose the right company, easy to ride their growth to a bigger paycheck.

But what makes a company the right company? Well, there is a simple way to be sure you are making a safe investment without getting too much into the analytics of investments and it amounts to a few questions about the company.

Are they making a profit? Are they distributing their profits as dividends?

Does it make enough to cover any debt obligations? Do you predict it will still be here in 50 years?

If you answered no to any of those questions, then move on.

It’s really about your judgment. All the analytics in the world won’t help you if your gut says “no”.

You’re aiming to own a small portfolio of companies, rather than tiny pieces of many companies.

In broad strokes, the right companies tend to come under banks, retail, textiles, and oil companies.

Fundamentals that society isn’t about to do without anytime soon. Twitter might feel like you can’t do without it, and it might feel like a good investment now, but if it didn’t exist tomorrow, everyone would simply carry on with their day.

Look At The Long View

The long view is a way to stop stressing. Life is difficult enough at the moment without the added stresses of stock investments.

This is why it is so important to start small, just to protect your own mental health while you are still getting to grips with investments.

You can’t live your life looking daily at your stock, wondering if this is the day to sell.

The stock goes up and down, causing you to worry if you’re missing a good chance and potentially losing money, so you’re stressing either way.

This is where choosing the right companies comes into play again. You’re looking for steady, long-term growth, instead of highly volatile stocks that go up and down with your blood pressure.

You have to choose companies that you have faith will restore themselves over time.

Good companies, like the ones listed above, are good at growing over the long term, even if there are some bobs along the way.

You might want to look into the rule of 72 to see where you stand with your shares.

Despite war, famine and plague, the economy is always going to expand. If you pick the right companies that you have faith will recover from fluctuations here and there, you can ride the lows to even higher highs.

Ultimately, the lesson here is to relax. This too shall pass.

Do Your Research

You are going to have to start studying to understand what you are doing when it comes to investments as a beginner.

Read books by experts and study the state of the market at the moment.

Understanding what companies feel safe to you will ultimately come down to the white paper of the company.

The purpose of the white paper is to entice you into buying shares of the company.

They also take the form of academic pieces, avoiding flash in favor of the facts, so they can be a headache.

But it’s important you give them a read to see what kind of company you’re about to get into bed with.

From the white paper, you can gauge what the aims of the company are for the future.

You can decide for yourself if you like where the company is going, if its goals are realistic and if it’s something you want to get involved with.

You can also look at the people behind the company and check their qualifications.

Buy Low, Sell High

It’s a cliché by now, but cliches are a product of truth. You buy your stocks when they are low and sell them when they are high.

You want to buy your stocks when they are at the start of an up-trending journey and then sell them at their highest point of that journey.

The stocks will fluctuate, as they all do, so don’t take a dip in their value as the first sign of a downward trend.

Don’t simply relent to making calls based on the graph, however. Make a judgment call.

The “experts” will look at the analytics and understand them enough to know what is going on, the rest of us gauge what is happening by looking at the news and the state of the industry our shares are in.

A brilliant investor would combine the two. If you are starting out, however, it would be best to stick to educational guesses from looking at what is happening elsewhere in the world.