Investing for Beginners
Today we will talk about investing for beginners. Investing is an important topic to be able to become financially independent and free. Firstly, it is very important to have an emergency fund because you never know what is going to happen. You have one or two months of money at least in your savings for an emergency. Then you have to open a retirement account.
There are different types of retirement accounts. You can start your retirement as soon as possible thanks to this account. 4O1k is generally set up through your workplace. If you are working regularly with benefits, there is a chance you have a 4o1k retirement account. It is an account that holds investments.
Through this account you are automatically being invested. Thirdly if you are unfamiliar with what stocks or what the stock market is,you have to do a big investigation about these topics. Especially with this 2021 pandemic year, a lot of people start to do some research about investment.
People use some type of fundamental analysis. This is through long-term investing where you are trying to find companies that their current stock price is lower than what it should be at the moment. One of the strategies is technical analysis. People who get into a stock and get out of a stock based off of technical. Normally most people do not sit in front of 2-3 monitors and check the charts all day long therefore it is not useful for people that much.
Long term investing is easier to follow and check for people. You do not have to worry about the day-to-day activity with long term investment. It is about where the company is going to be over the months or years.
What Are Stocks and How to Buy Them?
You can go to the App store and download some of the investing apps to buy stocks. A lot of apps are similar to each other these days, so it does not matter which one you download. Their features are very similar. Stock is just a piece of a company which you own. If you buy one share that means you own a tiny piece from that company. If you buy and own a lot of shares from one company, you can even vote on something that the company does.
It depends on you and your free time. If you have a lot of time and you can spend that time looking into individual companies investing in individual stocks you can be an active investor. If you are an active investor, you should look at each of your stocks at least once a week to be sure that everything goes smoothly. These days, a lot of people are struggling to find time because of their work or pandemic. If you are the one of those people you can be a passive investor.
How Much Should You Invest?
It is really important to start with a small amount of money in the stock market. You can build it up over a long period of time. The best way to learn this process is reading books and of course making mistakes. People can learn so many things from their mistakes. You can lose some money at first. Do not be afraid to make some mistakes. There are a couple of different financial statements from companies.
If you want to take your time and learn this process well, you can read them. There are balance sheets, income statements and statements of cash flows. You can take accounting classes too. It will be easier to learn everything.