It could indeed be tempting to put all your money in a stock after hearing lots of success stories from the many different people out there who have done the same thing. There are lots of inspiring stories about people putting their money in stocks that will easily entice you to do what they did because you would want their success to happen to you as well.
But before you get too excited and risk all your savings by investing them in a stock, I urge you to read this article first so you are more aware of what you’re about to get yourself into. The first thing that you must be prepared to answer to yourself is the possibility of losing money. Not to be a negative Nelly, but situations like this could occur and in fact has occurred too many time to different people as well who once has that dream of having their investment grow.
In a report made by The Guardian UK, the number one advice to first timers who would venture into stocks is to leave their money in medium term for the next 3 to 5 years (and possibly even beyond it). This is due to the fact that it takes a while for your money to develop. It is rather rare that your investment would already gain a lot in just a short period of time. Allow it to mature first before you set an expectation from it.
I like how financial adviser Andrew Merricks explain it into words, “Time, not timing, is the friend of the investor.” Let that marinate because there is wisdom to it.
The next thing you need to consider is what is it exactly that you must buy. According to experts, you could start by buying a fund also known as an OEIC or open-ended investment company. This would help spread your risk, which is like not having to place all your investment in one boat.
Another option for you to purchase (especially if you are new to this) are investment trusts. These are just like funds only a bit more complicated than OEICS because it would require you to know more about some technical details in finance and investment. It won’t be that hard to deal with it anyway if you really have the passion to learn about this.
Equity Bonds should also be in your options because these usually would not leave you empty after making a release for your investment. It often gives you back what you invested, so there is really no loss if you come to think of it. There is also room for your money to grow as well.
Having your individual savings account is also a must that you use for your initial investment. This would give you capital gains and it would definitely ease your mind when it comes to dealing with taxes.
These are just among the basics that you must keep in mind before you start investing in the stock market.