According to a study done earlier this year, less than 50 percent of young people are investing their money in the stock market right now.
Some refuse to do it after seeing the way the market crashed back in 2008. Others have seen the volatility of the stock market over the last year and have decided to wait until later to invest.
These are both very valid concerns. But if you want to set yourself up for long-term success, investing in the stock market is a good way to do it. And there are investment tips you can follow to avoid some of the potential pitfalls that come along with doing it.
Check out 7 investment tips that you should keep in mind whenever you invest in the stock market below.
1. Start By Educating Yourself About the Stock Market:
Most people have, at the very least, heard about the stock market before. But there are millions of Americans who don’t have the slightest clue with regards to how it works.
If you fall into this category, your first step should be to educate yourself about the stock market and learn everything you can about it. The internet has made that easier than ever before since it allows you to read about the stock market ad nauseam.
The internet also allows you to follow along with the stock market in real-time. You can get a much better feel for it by keeping an eye on the peaks and valleys that the stock market experiences on a minute-by-minute basis.
By getting a better understanding of the stock market before buying stocks, you’ll increase your chances of succeeding over the long term.
2. Set Long-Term Financial Goals for Yourself:
One of the biggest mistakes that people make when investing in the stock market is that they don’t take the time to set goals for themselves. Without goals, you’re not going to have anything to work towards when you invest in the stock market.
Your goals shouldn’t just be things like “Make money” and “Make sure I can retire one day,” either. You should get even more specific than that.
How much money do you want to try and make by investing in the stock market? At what age do you want to retire?
By answering these questions, you can come up with a winning formula for investing your money in the stock market.
3. Consider How Much Risk You’re Willing to Assume:
There are some people who absolutely love the idea of taking risks in all areas of their lives. There are other people who can’t stand taking risks and get stressed out even thinking about it.
Where do you stand?
Before you invest a single dollar into the stock market, you should take a step back and assess how much risk you’re comfortable taking on. You can be as risky as you want to be when it comes to investing your money into stocks.
As a young person, you should actually feel a little bit more free to take calculated risks if you want. You theoretically have plenty of time to rebound from taking a risk if it doesn’t pan out.
At the same time, you might feel more comfortable assuming less risk and letting your money grow gradually over 30, 40, or even 50 years. It’s all up to you based on your risk tolerance.
4. Take Advantage of Your Company’s Retirement Plans:
One of the great parts about investing in the stock market is that you don’t necessarily need to know the ins and outs of it to do it. Most people invest in it by enrolling in a 401(k) plan or another retirement plan when they first start working.
If you’ve tried to get a good grasp on the stock market and still don’t feel confident enough to invest in it on your own, schedule a meeting with your human resources manager to go over your retirement options.
This will give you a great place to start. Your company might also help fund your retirement plan once you enroll in one.
5. Enlist the Services of a Financial Advisor:
If your job doesn’t offer a 401(k) option or if you want to try investing in the stock market outside of work, it’s a good idea to hire a financial advisor to help lead the way.
A financial advisor can speak with you about your investment opportunities and tell you your best options based on everything from your age to your risk tolerance. They can also answer any tax-related questions you might have pertaining to the stock market and show you how to start investing right away.
6. Think Outside the Box When Investing:
Imagine how much money a person would have today if they got in on the ground level and invested in a company like Apple or Amazon when they first went public. They’d be worth a lot of money at the moment!
Investing in those kinds of companies seems like a slam dunk now. But the people who invested in them early thought outside the box and took a chance on a company that they thought could produce big returns.
If your goal is to make a fortune by investing, you’re going to need to swing for the fences at times while investing in companies and industries that are still sitting on the ground level.
For example, NICI is predicting that cannabis and, more specifically, CBD could offer some amazing investment opportunities for young people. It’s an industry you might want to explore for investment purposes.
7. Steer Clear of So-Called “Hot Tips”
While you do want to consider thinking outside the box when investing your money to get maximum returns on it, you don’t want to fall prey to the vultures that will try to sell you on “hot tips.”
If someone tries to sell you on a stock and guarantees that it’ll make you rich with little risk on your part, it’s probably too good to be true. Even if they say they know something that no one else does about a particular stock, you’re better off investing your money elsewhere.
“Hot tips” have caused more than a few investors to go broke over the years. Stay away from them at all costs.
Use These Investment Tips to Achieve Financial Success:
There is, unfortunately, no way of knowing how much money you could potentially make by investing. But if you follow these investment tips, you should give yourself a better chance of achieving financial success one day.
Just make sure you know exactly what you’re getting yourself into ahead of time. It’ll help you navigate your way through the ups and downs of Wall Street.
Would you like to learn more about buying and selling stocks before you get started? Take a look at our blog for a simple explanation of stock trading.