If you are a student looking to make a little extra cash in your spare time or wanting to get a little nest egg started, then investing in the stock market could be a good option for you. Investing is not easy however, and you cannot always expect guaranteed returns. Before you put good money down on the stock market, consider these 4 points:
1. You Should Pay Off Your Debts First
If you are investing in a fund that earns 4% a year while paying 15% a year in debts, you are actually losing money. Pay off those high interest loans and credit cards first before you start investing.
Paying off your highest interest rate debts will leave you with more money to put towards other things in the future. It might not be the most fun way to do it, but it does make sense.
2. Choose A Good Broker
Do your homework before you get started. There are a lot of brokers to choose from and they differ significantly in their fee structure, the trading platform they use, and the regulations they are operating under. Check each one to see where they are based, how protected your investments are and what they have to offer in terms of trading tools and even, educational tools.
he Meta Trader platform is a good choice for most investors being fairly easy to use for beginners but also very sophisticated, so it will serve you well as your confidence and your bank balance grows.
3. Start Small
Start with a small investment and resist the temptation to use a lot of margin or leverage. Brokers may try to sell you on the idea of high leverage since it will amplify any gains that you make, however, it will also amplify any losses. You cannot afford this if you are just getting started and don’t have a lot of reserves.
Work out how much you can afford to invest and then, invest only a portion of that at a time so that if you have a bad day, you will still have some money left over to work with.
Investing is something that people can make a lifelong career out of. Just like you are studying for your chosen profession, you will need to study hard to get started with investing. If you want to learn the mechanics of investing properly, you will need to read up on the different trading instruments and how they work. You will need to learn about trendlines, candlesticks, fundamentals and other tools.
You are off to a good start simply because you are choosing to get started while you were young, so do not waste that head start. Take this chance to go to as many seminars as possible, read as many books as possible and form your own opinions about the best way to invest.
Remember that no one can predict the future. You will always face some risk of losing your money. Anyone who promises otherwise is being optimistic at best and could be trying to scam you. Take control of your own investments and you will have nothing to worry about.