Currently, most people consider the stock market as a quick money-making model. News shows, movies, and TV shows present the stock market as a quick money-making model, but the reality is very different. You will make your healthy wealth from the stock market investment but beginners don’t know about the basics of the stock market, how works and why goes up and down. In this blog, we will learn how to start investing in the stock market and complete a road map for beginners.
Why invest in Stock Market?
Start asking questions yourself first why are you investing in the stock market, you are surely looking for high returns on your investment, but at the present time you have many options to invest like real estate, gold, bonds, etc. so why invest in the stock market?
Journey of Stock Market in 2023
The most well-known market in the US is New York Stock Market (NYSM), which is located in New York City. NASDAQ (National Association of Securities Dealers Automated Quotations) and American Stock Exchange (AMEX) are exchanged.
We don’t need to go deeper into the history of the stock market but here we mention some data which gives you some motivation to start stock market investment please this is historical data for your information and motivation, this will not happen again but this type opportunity or more than that future will give you best.
Nasdaq 100 chart from 1985 to 2023, here you can see the chart movement and as we see long time journey you can easily find that 130 to 16000 journey just took 38 years. Just think about this journey and assume this type of journey will come so you have the opportunity to invest in the stock market. As some market expert says the stock market will give you the best return other than any investment.
Present Stock market condition
As the above chart you can easily find that recently Nasdaq 100 crossed the 16000 level and at its present level is 12000, it means this is an opportunity to grab now, but as you are a beginner you just need to understand this value is very fine due to the market in very down due to some of the global problems like Russia vs Ukraine War, Covid-19 (CORONA) and Inflations.
Experts of the market and economists signal to us that the market going always high and in the future market will give you the best result from your stock market investment. You need to choose to write stock or fund to invest at this time for your future wealth.
Future of the stock market
Due to COVID-19 and FED rate hike, this time market is showing some negative results for investment in the stock market but as a long-time investor you need to focus on the future of the stock market, this is the time you need to find the right stock to invest and don’t put your all money at the single time, but divide your fund into 3-4 parts and invest in a market different time.
The US stock market leads the world in all markets and many upcoming companies and the current company is also capable of making the future bright because they have enough experts for future planning, they are just doing situation-based planning but soon market and companies are ready to fly, so stock market also gives the best result for the investor.
Roadmap to start investing in the stock market for beginners
5 Steps to Start Stock Market Investment
- Investment Goals: First you need to be clear about your goal, why are you investing, your future wealth, your kid’s study, your retirement, or any of your future goals.
- Your Risk Capacity: In the stock market this is the most important key factor that how much risk is your taking, for examples if you are going to take a risk high you can choose small or medium-cap companies’ stock to invest but if you are not taking too much risk, just go with blue chip companies’ stock or fund. At this time I suggest you go with a safe investment by the time you can choose small or medium companies when you have experience with market behavior.
- Investment Style: In the stock market you can invest for 1 day, a few days, or a few years, basically Intraday investment is trading, for a few days investment is short terms investment and for a few years investment is a long-term investment. At this stage, you have no information about the market you need to choose long-term investment in the stock market.
- Investment Account: For investment in stock you need to account to invest. Many best services provider are available you can choose one and start investing.
- Diversify for Investment: In the stock market, no one predicts which are the best companies but you can go with multiple companies, which gives you more risk diversification from your investment. Few of your investments give good or negative results against some companies that give the best results, so overall your portfolio gives you positive results or less loss.
Stock and Fund Selection
The next step is choosing stock and funds for investment, but as you are a beginner you have no idea about any company’s stock so how you can choose stock for investment here we mentioned an easy process for choosing stocks.
| CATEGORY | MARKET CAPITALIZATION |
| Micro-cap companies | Less than $300 million |
| Small-cap companies | $300 million to $2 billion |
| Mid-cap companies | $2 billion to $10 billion |
| Large-cap companies | $10 billion to $200 billion |
| Mega-cap companies | More than $200 billion |
Most beginners start investing for more return and choose micro or small companies to invest in, that is the wrong process to start investing. If you want good returns from your investment you need to invest in large-cap companies or Mega cap companies.
If you don’t want to go with this process, you have the best way to choose companies around you like which products you use daily and most of the people use around you, start investing in that companies.
9 tips for beginners
- Avoid investment in 1 stock or fund, invest in 5 or more stocks.
- The maximum investment is in funds, not in individual stocks.
- Always accept market downfall.
- Before starting an investment get some information about stock investment.
- Always go for long-term investment.
- Strongly avoid trading at this stage and also avoid short-term investment.
- Be punctual for investment.
- Start investment early. don’t wait for big money start with little.
- Your invested companies or fund analysis at least quarterly.
Remember, in the stock market, you could lose your money, so invest in the stock market with enough information about your risk and result before investment. At the beginners’ stage, we suggest you try some time virtual investment to educate yourself. As mentioned above process definitely helps you but it’s your hard core to earn money so choose a safe way to invest.