Stocks offers the best gain when it comes to investment. Gains of 5% to 200% and 300% are even possible. On top of that, certain companies gives annual of quarterly dividends and bonuses. It is by far the best instrument of investment if one knows how to use it properly and not be controlled by it.
Emotions
Firstly, take precaution and have a controlled heart. Guard your heart against greed and fear. You need to first set aside a certain amount of money from your savings and this amount of money is something you can afford to lose if things goes suddenly wrong. This money cannot be intended for children’s education or house renovations and etc… Remember it is an amount that you can afford to lose.
Open a Share Trading Account
Next you will need to look for a Share Trading Account. Look for a bank or security firm that allows you to trade stocks online on your own. Check how long it takes for them to transfer money to and from your savings account. Check if they give you interest on your uninvested money that is in the Share Trading Account. Install a demo version of the software (if applicable) and familiarize yourself with their software.
Research
Once you have your share trading account in place, you are ready for action. Do some research on past year performances of companies. My advise is stick to the sector which you are most knowledgeable in. It could be related to your work or something which you always updated at (eg. Properties, banking, IT and …). You must know that you are going to buy stocks in these companies and you are interested in buying in as ‘Partners’ or ‘Share holders’. If your mentality is of speculation and like a gambler, I recommend that you go to a Casino instead, investing in stocks and shares is not for you. I have seen entire family struggle because the bread winner gambles their savings into dust. But if you have the right motive of being a share holder, you will look for strong, reputable stocks that you would like to be apart of for long term, this is how Warren Buffett does it. So find stocks which has strong savings and assets, pays consistent dividends and the stock value which is comfortable for you.
Timing
Always remember that the best time to buy in is when everybody want to sell out. You will be tempted to buy in when stocks are running high. And in fact you will feel like a fool or weirdo not to join everybody else when Bull Run happens. But if you can control your urge, the rewards are great. Be cool, what goes up must come down. Get your money positioned, do your research and be ready during the Bull times and when the Bear comes, buy into those stocks which you have researched. Don’t doubt or try to think if this is as low as it gets, you will not find the lowest point of the stock. Just buy in.
Rewards
After you have bought your shares. It is time for you to sit and monitor the progress of the stocks. Think long term, about 2 years – 3 years or even longer. Good stocks will give you steady dividend and gains. So relax and enjoy the ride.
