Getting Started in the Stock Market
by NCA Financial Planners on Jan 22, 2019
Investing in the stock market can be extremely rewarding, but is not without risk. While most investors understand that volatility is a given in the stock market, for those trying to decide whether to invest, the volatility alone gives them pause. A lot of people are too risk-averse to be comfortable investing in the stock market. They want a sure thing when it comes to investing their hard-earned cash. Unfortunately, a sure thing that also offers potential growth opportunity is hard to find.
For those in their 20s and 30s, investing in the stock market is one of the best places to start as their age alone will allow them to ride out the dips that occur. But no matter what your age, the stock market can be a great way to shore up your retirement income.
If you’re hesitant, but still interested in investing in the stock market, here are a few tips that may make investing a little easier and allow you to sleep a little better at night:
- Start slow. The key to doing anything that you’re nervous about is starting slowly. The same goes for investing. Once your comfort level increases, you can add a variety of investments to your portfolio, but to get your feet wet, purchase a few investments from well-established companies that have been around for the long haul.
- Know that you’re in it for the long haul. If you’re in your 20s or 30s when you start to invest, you have plenty of time to weather the typical ups and downs of the stock market. But even if you’re not, holding investments for at least five years will typically allow you enough time to recover from recessions and volatility. You may not enjoy the rollercoaster ride, but at least you can relax in the knowledge that the dips are only temporary.
- Be sure to diversify. It will ease your worries considerably if you make sure that you diversify your portfolio, ideally with a mix of stocks, bonds, and other short-term investments or real estate holdings.
While the stock market is certainly not for everyone, those that have the resources available can certainly benefit from investing early and not reacting to periodic dips in stock prices.