Many people see the opportunities in stock market investment, but have no clue what the market is really like. People will throw their money in and hope that it turns out okay, and it usually doesn’t. If you wish to know all you can before you start taking a risk, read on for all the information you need to get started.
Keeping things simple is applicable in all areas of life and especially in stock market investing. Keep all your investment activities simple so that you don’t take unnecessary risks in the market.
Stocks are more than a piece of paper that is bought and sold. If you own a stock, you actually own a small part of the company, and you should take that investment seriously. This gives you claims on company assets and earnings. Sometimes you are allowed to vote in big elections concerning corporate leadership.
Keeping six months of living expenses in a high interest account provides a lot of security. If you experience any financial hardships, the account will help you pay for the cost of living.
Try and earn at least 10% a year since you can get close to that with an exchange traded fund. To get an idea of what the return on an individual stock might be, find the dividend yield, as well as the stock’s projected earnings rate of growth and then add them together. Take for instance, a stock which has 12% earnings and 2% yield may give you around a 14% return.
To make the most of your stock market portfolio, develop a detailed plan with specific strategies and put your plan in writing. Be sure to include your specific intentions on when you will buy and when you will sell stocks. This should also have a spot that clearly shows your budget for investments. This practice will ensure that your decisions are based more on logic than on emotions.
You shouldn’t invest too heavily into your own company’s stock. There is nothing wrong with wanting to show your support of where you work; however, it is always smarter to diversity your portfolio and not keep all your eggs, or you cash, in one basket. If your company goes bankrupt, you will be losing money on it twice.
All of the information within this article should help you get your start. You should now be better prepared to start investing and see your money multiply. Remember, there is always risk involved, but if you carefully apply what you’ve learned from this article you are likely to make a great return on your investments.
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