Investing has never been so interesting, available, and possible than in these years of technological improvement and electronic advancement. It has become an intriguing and easy way to earn money – if you know what you’re supposed to do, and be good at it.
If you plan on starting to invest in 2021, there are a couple of things you should pay attention to before your actual kickoff in the stock market, if you wish to succeed and, luckily, thrive.
But be prepared, it’s a rocky road.
Do a Proper Research
Just like before starting any venture without having all the needed information or not knowing enough about the topic, doing research is crucial in investing too. Getting to know the terms, companies, actions, good and worrying behavior of the market… would mean a difference between a smart investment and money unnecessarily lost.
And it has never been a better and easier time to find and learn about anything, anytime and anywhere.
After getting to know the investing terms, you should get familiar with the companies, their assets, and their financial situation next. When doing your research to pick the best investments, keep in mind that you’re looking for companies that have a strong competitive advantage over their competitors. This is usually achieved because these companies have some sort of advantage, be it financials, operational excellence, steady historical data, or patent ownership.
So, if it’s difficult for competitors to provide what these companies do or achieve – it might be a good investing source.
With a Little Help From… Smartphone?
One of the biggest advantages of our era is how easy and possible it has become for literally anyone to fire away at investing. Back in the day, not only did you have to be physically present at the stock market during any exchange action, but your brokers had to too if you had the prestige to have them. Even the communication between you meant that you had to be either physically present or physically connected by analog wires.
Following the rise of smart and android phones, the whole process has become more simple and accessible, for starters. Now you can roam around the stock market from the palm of your hand, wherever you are. It isn’t a mysterious and closed area as long thought to be thanks to various investing apps and the leisure of their use. And this review of Stash Invest, for example, shows how these apps are great as a helping tool for beginners, as they help to establish a financial footing but are also worth long-term accompaniment because they show you which companies are on the rise and where to hesitate.
If living in the digital era, you might as well make the most of it.
Focus on Inner Worth
You might think that knowing how and where one company earns its money and what assets are the most worth, might help you to make a good decision in investing in it, but the truth is that you cannot base your financial verdict on just one factor.
By doing broader research and considering the company’s historical data, you can look past the possible momentarily good fortune and take a closer look at its flexibility, ability to deliver shareholder value and to notice how it reacts to the challenges of a volatile market.
Again, these are all factors that could give a company a competitive advantage and earn you a steady and secure income. Therefore, look at the inner, deeper factors that do matter:
- Revenue – is what you see when you look at the income in a specified time period.
- Net Income – is the total amount of revenue that the company earns after taxes, costs, and reductions.
- The profitability of a company per share – is the ground where you can compare different companies by dividing income by the shares that are available for trade.
- The company’s stock price – is giving you a price-earnings ratio as you can divide it by the earnings per share over a specified period and see if it’s a good metric.
Make a Functional Plan
A plan is a plan even if you plan on investing in all the companies and assets that seem to be doing the best on the market. Almost always a state of success on the stock market fluctuates, and it brings you back to make important financial decisions from the start and this can be very time-consuming and stressful, especially to a beginner.
Once you determine and set your goals, the risks you’re willing to take and understand how the market functions, you can start creating a plan that reduces those risks and, with some effort and research, increases your chances of meeting those goals.
And once you make a plan that works and brings that steady and desirable income – you should stick to it.
The Longer You Are, the More You Stretch
Meaning, as someone who’s only starting, do not look greedily to investment options that offer high rewards, but rather start with low-risk investments and progress slowly. This, as a general rule, only means that it’s safe to invest in high-risk investments after betting the bottom dollar on lower and more secured investments.
Of course, depending on your actual financial goals and if they’re long-term or short-term, you should be doing investments with steady, smaller risks with minimal return points (in the beginning, as mentioned) or vise versa as bolder investments with more risk are more appropriate for short-term ones.
Lastly, one of the winning strategies is to look upon what’s current on the market OR to recognize what might become and secure those assets.
We have noticed an unbelievable expansion of cryptocurrencies, for example, and it would be worth shifting the attention and time learning what to do with them and how the inscrutability around them dictates the rises and falls in their supply and demand.
And as new currencies appear, the market becomes erratic which provides a piece of cake for everyone. You just need to decide when to buy a prospective asset, as promptly and lowly as possible.
Even when you make a plan, when you consult experts and have a helping app that tells you what to do… you should understand that there is always a risk of loss as this game is truly a game of small losers and big winners. Be sure to secure every step of the process and decision and good luck investing!