Simply put, people invest their money in order to make more. There are many good investment
opportunities that arise everyday, but like anything, there are also bad investment opportunities.
Before jumping into the stock market,
consider:
1. How much capital is available to invest
Believe it or not, many people make the mistake of going "all-in" by cleaning out their entire
savings account to begin investing. This is not the smart thing to do because one bad investment
can significantly damage your capital. First things first, you should find out your net worth.
Net Worth = Total assets-Total Liabilities
A good amount to begin investing with is about 5% of available capital.
2. Risk Tolerance
Are you generally conservative, aggresive, or somewhere in between?
Every one can afford to gain, but how much can you afford to lose?
ex. A retired person has more to lose than a bachelor in college. Keep the risk tolerance in an acceptable range based on your personal goals.
3. Types of stocks you will invest in
Invest only in things you understand! For example, if you don't know anything about
computers & technology,
choose a different sector of the market.
4. Saving emergency money
Emergencies happen to everyone!
Do NOT use this money to invest! |
