ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

How Do I Get Started Investing in the Stock Market?

Updated on March 26, 2016

Why Invest in the Stock Market

The stock market is one of the best areas to invest money. Over time, investing is the best way to build up wealth. Millions of people have their entire life savings invested. Getting started at an early age is the best way to make significant progress in this area. There are a lot of interesting market facts that you should know. Here are a couple of tips for anyone just getting started.

  • Think Long Term
  • Don't Panic
  • Make it a Habit
  • Do Your Research

For beginning investors, there are plenty of index funds that simply mimic the market. Often times, this is a great choice for people who are just starting out. Instead of trying to guess what the next Apple is, simply buying a fund to track the market is preferred. When investing, there is a lot of volatility to deal with. By thinking long term, you can avoid losing sleep at night and view downturns as an opportunity to buy.

Compounding Returns

The Power of Compounding

There are few people who know how much compounding can really help them with their financial situation. Compound Interest is known as the eighth wonder of the world simply because it is hard to believe how much wealth you can accumulate with little effort. Did you know that the average person can retire a millionaire by investing just a couple hundred dollars per month from the ages of 25 to 65? This is all possible as a result of the power of compound interest.

Measuring Returns

The rate of return is the annual amount that your investments will increase by. For example, if you invest $1,000 and the stock market goes up ten percent, you will have $1,100 at the end of the year. Over time, this initial investment really starts to add up.

According to the Rule of 72: Your investments will double every 7.2 years with an annual interest rate of just ten percent!

This is why it is so important to start investing early. The earlier you start, the sooner your money will be working for you.

Planning Your Investing

Risk Tolerance

The biggest indicator of your annual return is your risk tolerance. The beta on a stock is a measure of the volatility that investors should expect. Higher beta stocks have a higher return over time, but they are also a lot more volatile. Here a couple of examples:

  • New Companies in the Tech Sector
  • Biotech Firms
  • Oil Drilling Companies

By investing in these areas, you have the potential to earn a high return on investment. However, there are also days when you will regret ever investing.

Dividends

If you prefer to have less risk in your portfolio, there are a lot of solid companies that offer high dividend yields. A dividend is simply a quarterly payment to shareholders. This really helps to enhance the annual returns in your portfolio. Large corporations typically offer these dividends because they have an abundance of cash on hand. Learning how to harvest the power of dividends is an important step in the investing process.

How Comfortable Are You With Investing

How Comfortable Are You With Investing

See results

Stocks

Low Risk
Medium Risk
High Risk
Low Volatility
Medium Volatility
High Volatility
Low Returns
Medium Returns
High Returns
High Consistency
Medium Consistency
Low Consistency

Staying Consistent

Think Long Term

The most important aspect of investing is staying consistent. There are going to be times when the entire stock market goes down for weeks or months at a time. Instead of panicking, this is the best time to buy more. Always remember to keep these rules of thumb in mind.

  • Buy Low
  • Sell High
  • Stay Consistent
  • Don't Panic

By following these simple rules, you can have better returns than many other average investors. Far too many people want to buy into the market when things are going good. In reality, buying when the market is going down is the best time to get a deal. Always keep this in mind when investing.

If you want to build high levels of wealth over time, the best way to accomplish this is to stay consistent in all types of markets.


The Oracle of Omaha

working

This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://corp.maven.io/privacy-policy

Show Details
Necessary
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
Features
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Marketing
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Statistics
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)