stocks

How to Invest in Stocks?

Investing in stocks are some of the commonest ways in which people get to grow their residual income. In most cases actually, it is how people get to save up for their retirement. It is for this reason why it is important that one knows how to invest in the stocks even if they are using an agent like an investment company or a brokerage firm to handle their trades.

The first thing to ask when investing in stocks is, what kind of an investor do you want to be? There is two types of investments, speculative and long-term investment.

stocks trading

Speculative investor

This is an investor who is there to make a quick buck and run. What this means is that they are not in long-term investment. Their main goal is to sell when the share prices rise and to buy when the share prices fall. All they usually require is hat the selling price goes above the buying price and they are ready to execute a sale. The good thing about this type of investment is that one rarely makes a loss, its disadvantage is that one may not be able to reap the full benefits of the investment.

Long-term investors

Long-term investors on the other hand usually play the long game. They are in it for not only the growth in share prices but they are also after the dividends that come with being a shareholder. This means that they are loyal to their brand, unlike the speculative investors. The beauty of being a long-term investor is that in case you land on a good profitable company, your share prices will keep on growing while at the same time you will be enjoying the dividends.

Irrespective of the kind of investor you are, you need to understand the market forces that drive your investments. News for instance in crucial to any market. It is therefore important to keep abreast with the current trends affecting the sphere of your investment. If for instance, you are ion the oi;l business, the discovery of new oil deposits is likely to trigger a movement in the prices of oil, and this will impact on your investment.

If you are not in a position to do the investment yourself, there are several options that you may want to consider. Of these, the most commons ones include:

Brokerage firms

These firms are usually established investment companies that will trade shares on your behalf. This means that they will advise you on where to invest when to buy or sell shares depending on the movement of the market. This means that there is little input on your side. The beauty of brokerage is that you still have a say in most decisions concerning your investments.

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Mutual funds

Mutual funds technically work like brokerage, only that for them, several investors bring their money together under the care of an investment professional where they agree on the percentage of return that they expect to get from the investor. This means that they don’t have much control over where their funds are invested.

The above are some points to note when getting into investments. The most important thing, however, is to ensure that the investment that you chose is suitable for your needs. Again, it is good to be well advised even in the instances where you have hired an agent to manage your investments.…