95% of the people who invest in stocks for the first time have to book losses and even those with experience lose 60% of the time. Stock markets bear high risks and only the best investors, who have interior information can make huge profits in the long run.
After earning money with plenty of hard work, you will surely be seeking the best investment opportunities available. Unfortunately simply leaving it in the bank won’t isn’t a good option, because the interests barely meet inflation. However there are many other choices you can choose from, brokers and fund managers all offer great returns usually somewhere between a yearly interest rate of 10% to 20%. This can be considered a relatively safe option, which is also profitable, but some decide to try the investing themselves.
Things to know before investing in stocks
After all the global economy is growing, even with occasional setbacks, investing your own savings seems like a plausible option. In addition, if done well this method offers the largest potential returns, but can only be called stable when compared to gambling. There have been many stories of success, investors that started with nothing and ended up with millions, the most well-known of our time being Warren Buffett. Indeed he has made billions of dollars, with wise choices and a pinch of luck.
You can certainly try to follow his steps, but there are numerous precautions you should take, because it’s extremely difficult to achieve anything similar. First and foremost learning about the stock market. Knowledge of anything and everything is something you will need, you should get familiar with the basics of:
– market structure
Understanding how this complex structure works, can help predict and explain actions. Unfortunately it’s become so large and so elaborate, that it is impossible to accurately predict every action or trend.
If investing as an individual you’ll have a huge disadvantage compared to professionals trading on the floor, because they will receive information much earlier then you, and by the time you can buy the affected stocks, they’ll have sold their part, thus resulting in declining prices and making you lose money. It’s a tricky game and without internal information succeeding is very difficult.
Along to these downsides, luck has to be mentioned as well. It’s something you will surely need in order to achieve large profits. Random things have great impact on the markets, many of these can’t be predicted securely i.e. a:
– a bad sales report
– shortage of components needed for production
– bad weather conditions
– a seemingly bad political decision
– bad mood on the market etc.
Even if all signs point towards gains a decision or actions of such can quickly turn your luck.
Because of these factors it is always important to diversify your portfolio, this can reduce your potential earnings, however it protects you from large losses.
Also make sure that you only invest sums of money you can spare and don’t need over a larger period of time.
All-in-all investing in the stock markets can be rewarding if you have enough knowledge to safely manage your portfolio. However large sums earned quickly are very rare and it would be unreasonable to have expectations of such.