The old saying that money can't buy happiness may be accurate, but money certainly can make many aspects of life safer and more enjoyable. That's why many people dream of becoming a stock market millionaire. While playing the stock market can and does make many people wealthy all the time, it takes some significant knowledge of how stocks work, the ins and outs of specific industries and the willingness to take sometimes substantial risks. There is no specific way to strike it rich while investing in stocks, but there are some best practices that may help you be profitable.
Use the Best Stock Websites
Where you trade matters. Some stock sites offer a lot of support, but it comes at a heavy margin. Until you're savvier and know what you're doing, experts recommend trading on one of these platforms and then transitioning to something more autonomous.
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Alternatively, you can also seek the assistance of a financial planner from a reputable firm to assist you. Again, you will pay fees, but you're likely to avoid large losses.
Buy Low, Sell High
Especially when you're first getting started, don't be afraid to buy and sell stocks often, particularly if an advisor recommends it. Buy cheap and in high volume, if you can. If you buy $150 worth of stocks in a small company and it's worth $250 a few weeks later, there's nothing wrong with selling right then and there and taking your profit if you are also willing to lose the money, should something go wrong and a stock not increase.
Then, the trick is to take the additional funds you made fast and relatively cheaply and re-invest in something more lucrative. Ideally, you'll be cycling your money in this manner constantly. Always have some short-term and long-term investments.
Again, this is a strategy for those who are familiar with the market and know what they are doing. It's unwise to put all of your money into any one stock; mutual funds are a much safer bet for the long haul, particularly if you won't have the time to stay informed.
Focus Your Attention Elsewhere
The nature of the stock market is such that you will have some setbacks and are almost guaranteed to lose money at some point. The trick is not to give up and instead to bounce back, as this happens to even the savviest of investors. Especially when you're getting started, make sure you're not taking risks that could cause irreparable financial damage.
Also, keep in mind that setbacks can turn themselves around. Even if a stock in which you invested is way down, it won't necessarily stay that way. Consider waiting it out. The SEC explains that those who buy and sell quickly, like day traders, place themselves in an incredibly risky financial position.
Stay Innovative With Start-Ups
One of the best ways people have made fortunes in the stock market is by investing in start-ups that explode in popularity. This goal can be challenging to achieve, however. By the time most of us hear of the latest and greatest stock opportunity, its price is already sky-high.
One way to accomplish it is to choose a growing industry and learn a lot about it. Stay aware of up-and-comers and change-makers within it. It doesn't have to be technology, either. If you're into makeup and beauty, there are plenty of innovations coming there, too. Same with cars, retailers, medicine, distribution and much more. Stick with what you know and enjoy and be on the cutting edge.
On that note, another good piece of advice is to be discerning. In other words, don't believe a company's hype. They're trying to sell you the ultimate product (themselves). If you have a good feeling based on your research, then go for it. But don't take their word for it; if you're not an expert, consult with someone who is. Visit some of the best stock websites to learn about individual stock options and industry trends.
Aim High With Capital
People who are looking for long-term security are looking for some of the most valuable stocks. These stocks aren't always in the news, but they tend to stay high even through economic ups and downs. Some examples include health care companies and food retailers (especially grocery stores).
These are the stocks in which you want to make long-term investments. Buy them when you have the money to invest and hang onto them for years. They will grow naturally, protecting your money from inflation.
Consider also: How to Open a Day Trading Account