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Advice on Investing in the Stock Market
Stock Market Advice
Investing in stocks and bonds has become easier for the individual investor in recent years for a number of reasons. There are resources for investment advice online, as well as online access to accounts, investment brokers like HSBC and even Internationally based stock exchanges, such as the Australian stock market.
Before investing in any international stock market exchange, become familiar with the rules and regulations. Don't assume that the market operates identically to the New York Stock Exchange or NASDAQ. Also take into consideration the differences in the currency exchange, the economic climate and governmental influences.
It is possible now to make your own trades online without having to interface with a stock broker or other staff at a brokerage firm. You can place your buy or sell orders at your own convenience. The small investor also has much more investment information available than ever before. Services like Morningstar, www.morningstar.com, provide detailed analysis and ratings for stocks and mutual funds, making it much easier to choose from the hundreds of mutual funds available.
More and more, it is possible for an individual to make his or her own investment decisions, based on reliable research data, rather than having to rely on recommendations made by a brokerage firm. Competition among the many firms that offer brokerage accounts, particularly the online accounts, has substantially reduced transaction fees � the cost of buying and selling shares �which used to be an impediment to being an active trader of stocks or bonds.
It wasn't that many years ago investment firms required a relatively high threshold amount to be deposited in order to open an investment account with them, such as $10,000. This was a barrier to the individual just getting started with investing. But these barriers, too, have fallen, as investment firms now actively court the smaller investor, with the goal of building a long-term relationship with them.
Because stocks can be volatile investments in the short-term, it requires a certain amount of patience to be successful. You have to ignore the day-to-day swings caused by good or bad news on the economic or political fronts, and have a disciplined, long-term strategy.
One strategy is to add a specific amount to your investment account at regular intervals, say every month or every quarter, whether the market is currently having a bull (up) or bear (down) phase. Historically, stocks provide greater returns than many other investments�over the long term. Holding stocks over the long term has generally proven to be a sound strategy for the individual investor.
While stocks are a valuable addition to your investment portfolio, don't focus on stocks exclusively. Bonds are safer than stocks but don't provide nearly the growth. Mutual funds are another alternative that are less risky than investing in specific companies but takes advantage of the stock market's growth without being tied to one company.
Before investing in any stocks, make sure you have at least a three month -- and some gurus say six months -- emergency fund. It's also best to pay down credit cards that have high interest rates before investing in stocks.
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Dee Power & Brian E. Hill
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