According to CNN money there are many tips for how to invest in the stock market. First, an individual must understand that stocks aren’t just pieces of paper. When you purchase a stock, you are really purchasing a small portion of a company. You, and lots of other shareholders now each own part of the company’s assets. Keep in mind that there are many different kinds of stocks. Ways you can divide up the market include company size, sector, and types of growth patterns. If you are wanting to divide up stocks by size, some of the largest include Apple, Exxon Mobil and Google. Some of the smallest stocks are Solar Winds, Ancestry.com and Buffalo Wild Wings.
If you are looking for different sectors, you can break up stocks by categories such as technology, food, retail or healthcare. A third tip on how to invest is to learn that stock prices track earnings. You as an investor need to understand that it is a company’s earnings that determine to a large degree whether a stock’s price will go up or down. If you are wanting to get a return over and above the price of inflation then stocks are your best bet. The average stock is said to have a return of 10% per year. This is a great return, and a great long term investment to save money for retirement. Also, keep in mind that individual stocks aren’t the market and may go up or down regardless of what the market trend is at the time. The market could be doing great, and your particular stock is bottoming out. Each company is different, so each stock is different. Keep in mind that nothing is ever a guarantee or sure bet.
Just because a stock has done well in the past, doesn’t mean it is immune from harm or bottoming out at some point. Whenever you deal with stocks, you are assuming risk. Another great tip is to have a wide variety of stocks in your financial portfolio that cover many different sectors. This ensures safety if one area goes down, another might be able to help offset your loss. Lastly, a great rule of thumb is to buy and hold stocks. It is not in your best interest to engage in the game of rapid acquiring and selling of stocks. Do your research, find some good stocks to invest in, and then be patient.