Playing the stock market offers you a good chance of growing your wealth and bringing you the kind of financial independence you have always dreamed of. But, if you are a beginner you need to realize that it’s not an easy get-rich-quick scheme, you need to put in the work to understand the process thoroughly to be in the winner’s circle and not lose your shirt!
Those wise individuals who have taken the time to know the markets well and who don’t engage in high-risk share trading they can’t afford to lose in, will tell you that their investing success didn’t just happen overnight, they had to work at it first! They started out by carefully calculating the amounts they could afford to invest in stocks after taking a long, hard look at their current financial situation and resources. Becoming a successful investor and trader is a long process that requires patience and dedication.
We have asked some market experts for their advice on how to make a realistic appraisal of how much of your hard-earned cash money you can put into your first investments. Here is a distillation of what they had to say:
- What’s Your Risk Limit​? – How much money can you safely risk up front to use in making your initial investments in the stock market? Where will that money you intend to use be sourced from? Most people don’t even realize that many employers offer incentives for their employees to make investments, or will support your efforts by matching funds to bolster your investment power!
- Free Yourself Of High-Interest Debt – This is really important! Don’t start making a lot of investments while you are still under the thumb of your creditors, it is a recipe for disaster! You need to pay down and pay off those high-interest credit cards and accounts that are placing a drain on your resources every single day you are stuck with them! The high cost of your debt could easily overwhelm you if you are trying to do these two things at once, especially if you make the grave mistake of robbing Peter to pay Paul and use funds you should be paying your debts down with to risk on trades with the hope that you will make more than enough to handle everything! All it takes is for that trade to go sour and you are in big trouble! Get rid of all your debt before you start investing!
- Emergency Backup Plan– Starting your investing career with iffy finances never goes the way you want it to. By far your best choice is to have a solid financial foundation established for yourself before you begin to play the trading game! Your finances don’t need to be ideal, just secure enough that you can handle problems when, and not if, they crop up! It’s a great idea to always have an emergency backup plan in place, a few thousand dollars that you simply do not touch for anything other than a life-threatening emergency or natural disaster! Never, ever put it at risk on the market, it’s your safety net!
Playing the stock market can be extremely rewarding if you are sensible about it and don’t take foolish risks! If something sounds to good to be true, it is, don’t fall for it! Play safe and build slowly, be the tortoise, not the hare so you can cross the finish line and get the prize!
