So you have some money stashed in your savings account that you want to grow, but bank interest rates are so low it won't get you anywhere.
To keep up with the inflation, you need to find a way to invest and grow those savings.
When it comes to investing, many people first ask themselves: When should I start investing? Ask yourself: Do I know how the stock market works? If you do, you'll be able to take advantage of it but if you don't, there is a lot you can potentially lose.
Where do I stand financially? Do I have enough capital to invest? Are there any debts I need to clear? Investing to clear your debts is not a great idea.
In the event that you make even a slight loss in your investment, you won't even have that starting capital to repay those debts.
What financial instrument to use? When it comes to investments, there is no shortage to instruments, some require more capital, some require more observation, more time.
How much should you set aside for investing? That mainly depends on what instrument you are using.
For example, between stocks and options, stocks require a wider capital base whereas Options are leveraged so you can pay a fraction of the price of stock to participate.
When people buy stocks and it goes against you, you can lose a lot more than your starting capital but with Options, it will take action for you if you don't.
So between the two, I personally prefer Options.
Understand the instrument and make sure it fits well with your personality.
Once you have satisfied the above criteria, where can you start? First and foremost, I always teach my students to invest in ZERO CAPITAL.
Before putting your hard earned savings on the table, you'd want to know if your investment will be feasible.
Test out if your methods work with a virtual trading account.
Get yourself familiarized with the technicalities; learn how to enter trades, how to position yourself in order to make money from the market and how to protect yourself in the event the trade goes against you.
Make sure you are comfortable with these before you consider using live capital.
And when you do use live capital, use only half of it for investing.
If you have $2000 to invest, use $1000 to get another $1000, then use $2000 to get another $2000 and so on.
This applies to real AND virtual money.
The idea behind is that if you can't make a thousand with a thousand, what makes you think you can make ten thousand with ten thousand instead of losing it all? Having more money doesn't put you at an advantage in the stock market.
In fact, having more money means you have more to lose.
How can I apply this in the real world? 1.
Look to enter a position only when probabilities are at their highest Plan your point of entry and exit before actually entering the market Set a target price to lock in the profits Most importantly, set a stop loss to protect your capital 2.
Start as a conservative investor Focus on small and consistent gains Take more trades that yield small returns - target a 10% move in the stock To sum it up, the key to being a successful investor is to be an informed one.
Learn how the stock market grows, diversify your portfolio and not stack all your money into one investment.
Lastly, position yourself in the market only when the opportunity to profit is the highest.