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Let’s be Stocks Smart-Insight for Beginners

Updated on November 8, 2014
Stocks trading is a good way to eventually replace your job or to add another source of income to your current job.
Stocks trading is a good way to eventually replace your job or to add another source of income to your current job. | Source

We all know the famous quote “Money can’t buy you happiness” all too well.

There even revised versions of it that goes “Money can’t buy you happiness but it can sure buy you (insert material object) which is pretty much the same thing”.

As funny as it may seem I think we all get the idea of how important money is but more importantly how we should not be controlled by it.

Of course we need money to live but to live for the money is something we all want to avoid because it’s a trap that’s not going to lead us to happiness.

I believe they key here is to have financial stability and financial freedom at the same time.

How do we come to the point of being financially stable and free though? Well one step is to have a regular stream of income by having a job.

This is great because the amount of hard work we put into our jobs translate to the salary we receive.

We could also take as much jobs as we can handle to have multiple sources of income.

We can take freelancing jobs and part time jobs aside from our 8-5 jobs in order to have more money. This is essentially the reason almost everyone is working.

The second step we all do as well is to take a portion of our salary and save up. We set aside a percentage of money in order to reach a certain amount to be used when the need arises. Most of us have savings accounts in banks where we could safely store hard earned money for future purchases.

This is how most of us are able to eventually buy cars, houses, and businesses.

This brings us to step number three: Investing in businesses. Most of us want to save large sums of money in order to afford franchises of currently established business models or to start on one of our ideas.

This is a good way to either eventually replace your job or to add another source of income to your current job. This however requires large amounts of money and can be a bit risky. Of course, the success of the business depends greatly on how prepared you are as an entrepreneur.

It’s quite a feat to see small business owners turn expand from one quaint store to hundreds of branches on the downside however, you can feel the pain of those who have saved for such a long time only to see their business model fail.

Most people stop at this goal in mind but let me introduce to you step number 4 to financial stability and freedom: Investing in the stock market. This is especially ideal for those looking for a long-term investment.

Stocks represent the equity stake of owners in a corporation. Having some shares in the stocks of a certain company means you have a degree of ownership in the corporation. A good performance of this firm will mean a higher value for your stocks that you can then eventually sell for a profit a poor performance of the firm will result in the opposite.

The stock market represents the congregation of all buyers and sellers in the market. This is quite popular in developed countries but many more can still learn how to utilize this type of investment.

The first reason why you should be in the stock market is the ease of investing. Business require a lot of money to be able to start but in the stock market you will be shocked at how you can start with just a small amount of money. It’s not even complicated at all since it can be simple as you want it to be.

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To start off, you have to open an account with a stock brokerage firm. This entity will facilitate your transactions within the stock market since small time investors like us cannot directly buy stocks from corporations.

Once you have made your account you can start buying as much shares of whatever company you want. A good tip here is to invest in companies that you, as a consumer, trust.

Companies that you believe will still be around 10 and so years from now would be a great place to invest your money in.

A popular saying in stocks, “don't put all your eggs in one basket” also means that it would a wise to invest your money in a variety of trusted companies.

Not concentrating your investment in one firm will allow you to be protected from sudden unforeseen events that may cause your stock value to decrease. Once you have invested you can leave it as it is or continue investing in regular intervals.

If you have the time and willingness to do so, you can read up and learn on investment techniques that will allow you to make more informed decisions and come up with investing strategies.

For those that have no time though, periodically investing a fixed amount on a number of trusted companies would be a good strategy in itself. In a few years your money would have grown exponentially as compared to what banks can offer you.

It should be noted however that stock markets are not without risk, of course there will be times when your stock value will unexpectedly decrease.

There are natural fluctuations in the market that will affect your stocks in the short run but if you are looking at the long run, as long as again the company is trusted it will surely present good stock values in the future.

There is a lot of material on stocks and investing that will aid you in getting started and ensuring a greater chance of success in the market. It is also important to educate yourself and be stocks smart in order to have better control of your investments.

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