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August 20, 2005
The Starting Point For New Investors
When investors first formed the stock market, stocks were
traded and quickly grew to incredible profits. With every
trade, more investors joined in this enterprise until stock
market trading became a less risky adventure. Well, not
really. Stocks are still as unpredictable as when the
market was first formed. But, today, we have a slightly
better understanding of how this market behaves. Before
starting to invest in stocks, you should carefully examine
this market to pick up trends and other warning signals.
The origin of the stock market was not nearly as well
planned as God's creation of Earth. However, the stock
market did make it through some incredible and turbulent
times to get to where it is today. While the stock market
still has lots of risks, the careful investor can learn to
identify these signs and improve his techniques over time.
On "Day One", most investors just want to know a safe way to
invest as little as possible in stocks and still get a
decent return. Before you can light up your portfolio, you
need to do some research about which stocks work best for
your goals. For instance, are you looking for a long or
short-term investment? Do you have $500 or over $20,000?
Most beginner stock investors start with long-term
investments. Long-term investments usually last longer than
five years and involve volatile holding stocks or stock
mutual funds that profit well over time. You don't need
thousands of dollars to begin; many online brokers allow you
to invest in long-term stocks with $500 or less. Some of
these same brokers also permit you to make monthly payments
of $25 or $50 by automatic withdrawal from a checking
account.
Some investors prefer to get involved in less risky stocks
and invest short-term. These low to medium volatile stocks
generally come in a package and contain mutual funds that
are held for a year or less. Many beginners end up
transferring their long-term funds into short-term
investments to cover some specific goals like funding a
child's college tuition.
Assuming that stock will perform as you expect in a set
amount of time is a mistake. The market doesn't work that
neatly. If you count on a stock to be performing at an
exact rate 10 years down the line, you may be disappointed.
However, you can operate through some general guidelines
that may help you know when to buy or sell your investments.
Many of these guidelines involve simple equations such as
the price-earning ratio (the price you paid should be less
than the current market price) to tell you when to sell a
stock for a profit.
Investing in stocks is a lot like riding the tide. Of
course, going with the flow is never an easy thing to
practice. Sometimes you might feel anxious to quickly get
rid of stock prematurely or hold onto it for sentimental
reasons. For these reasons, many new investors prefer to
invest through an online broker such as Ameritrade.com or
E*Trade. Other new investors find joining a club helpful
since the group often thoroughly discusses stock
performances and the market before making a move. If you
have lots of money to invest, you may want to go with a
large firm like Charles Schwab that has the manpower to
carefully attend to your investments. To read more about
how to start in the stock investment world, visit places
online like WallStreet.com or Yahoo!Finance.
Copyright 2005 Miriam Amiro. All rights reserved.
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Miriam Amiro is the proprietor for FCL
Investment Inc
whichis the #1 resource for investment information on the
Internet. For more info visit her complete archive of
articles at: http://www.fclinvestment.com/
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