The First Steps of Becoming an Investor

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All of those day traders had to start somewhere.

My dad likes to play the stock market on occasion, often joking that it’s essentially “gambling for smart people.” Amusing as that is, it’s actually not that difficult to get your start as an investor, especially these days. You do need to be savvy, and you’re not going to become a day trader overnight, but with a little work and mental math, anyone can make a few bucks on the stock market. Just remember these tips to get you started.

First and foremost, diversify. That’s not just a buzzword investors throw at each other; investing everything you have into a single company is like going all-in on an inside straight. If things go well, yeah, you stand to make a lot of money, but the economy is rarely that accommodating. Instead of throwing your entire budget into one stock, divide it up and sprinkle it around 10-15 different stocks. You won’t make as much money on one if it does well, but if one completely tanks, you won’t suffer as much of a loss, and you’ll have other investments to fall back on. Just don’t spread yourself too thin, or you’ll drive yourself crazy trying to keep up to date on every single company.

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Secondly, index funds. Stock indexes like the Nasdaq or S&P 500 track the health of the market. As long as the market is doing well, index funds will pay off, albeit in small, measured amounts. Think of investing in index funds like penny slots; you won’t make a lot of money, but your returns have a higher rate of success, and if you keep at them, you stand to make a tidy profit over a long period of time.

Speaking of long periods, that brings us to the last tip: patience. Investing is slow-go money. If a guy bought shares in Amazon in the 90s and then sold them a month later, he wouldn’t have made squat. But if he waited a couple of decades, well, he’d be Jeff Bezos. Stocks need to be carefully monitored and nurtured over long stretches before they start paying off. As long as you stay patient and trim off the stocks that aren’t paying off, you could find yourself with an impressive nest egg a few years down the line.

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9 months ago
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