Beginner investors are often afraid to start trading securities on a stock exchange. Indeed, any transaction can turn out to be unsuccessful: there is always a risk of investing money and losing it. This risk can be mitigated, like with betting on betting website, and it’s possible with the right strategy. Here’s how to do it.
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Understand How a Stock Exchange Works
Before taking part in trading, an investor should learn how the stock market works. You don’t need to know everything, but it can be helpful to know when markets open and close, as otherwise you may not be able to buy or sell stocks at the time you want. Or to know that when dividends are paid, stocks tend to fall in value, but that doesn’t mean you lose money. You should check out stock research platforms to stay updated on the latest stock news. Most of these research websites also offer ranking tools that allow investors to discover fastest growth stocks today, best stocks for recession, and many others.
Choose a Reliable Broker
Investors and issuers – the companies that issue stocks and bonds – can’t interact directly. To trade on a stock exchange, investors turn to intermediaries, known as stockbrokers. A broker opens a brokerage or investment account and conducts transactions on behalf of a client. It is from the broker that the safety of money and securities in the account depends, so you must choose the intermediary carefully.
Diversify Your Investments- Beginner Investors
Perhaps the most popular advice that novice investors hear is “don’t keep all your eggs in one basket.” But not everyone knows how to diversify properly. It’s better to combine in an investment portfolio:
- Assets of different types, such as stocks and bonds. Those who choose a conservative investment strategy with minimal risk usually make a portfolio of 30-40% stocks and 60-70% bonds.
- Securities from different countries. Take into account what position each of these countries has in the global economy. It is better to invest some of your money in assets of developed countries – the U.S., Britain, Germany, and other European countries. Investing in developing countries is riskier.
- Invest in companies from different sectors – for example banking, IT, retail and largest US defense contractors. Then, even if one of the spheres of business doesn’t go well, the value of your portfolio can remain the same or even increase.
- Invest in different currencies, including dollars, euros, pounds, and others. Then currency fluctuations will have less impact on the overall value of the assets you have.
Different types of assets keep your portfolio in balance. Possible losses from decreases in the value of some assets are compensated by other assets.