Why it Pays to Start Investing Young
When investing in a stock, whether long or short term, you want to make sure that you know what the company does and how you think it will perform in the current economic state. Always invest in company`s that you think have a potential to grow. Make sure you research the company and know what you are investing in. Never let anyone tell you that you should get into or out of a certain stock, because at the end of the day, it is your money, not theirs!
When buying common stock, you become a part owner in the company. You want to try to buy the stock at the lowest possible price and let it grow until you reach a profit that you are personally satisfied with. Occasionally, it is necessary to take a loss on a stock, but never let that bring you down. Sometimes it is better to cut your losses and run. Just learn from what you did wrong and try to build off of your mistakes
You always want to be well diversified in the stock market. If a particular sector in the market is having a weak day, then only a small percentage of your portfolio will be effected. An example of diversification in your portfolio is having stock in (AAPL) Apple = technology, (BAC) Bank of America = banking, (CSX) CSX = transportation, and (SVU) Supervalu = food consumption. Each of these stocks represent a different sector in the stock market.
In some cases, buying stock in large amounts is not beneficial in the long run. Buying in small increments may help average the higher prices down and also give you liquidity in funds. In certain cases other stocks may become more appealing.
If you are planing to invest on a short term basis, be sure to evaluate the investments chart to statistically plan its movements. By using trend lines, angles, and conclusions, it can influence your next position in that stock dramatically. Check different charts such as 5min, 30min, daily, and sometimes monthly to be aware of the volatility the stock undergoes annually.
Quarterly earnings and dividends can have a large impact on the share of a stock. This strategic information is public knowledge and easy to get. If acted upon early, a large profit could be made.
Investing can be very time consuming, yet if done correctly could be a huge success! Starting to watch and play the stock market at a young age could prepare you for the future and may even be your future!