Below are some of the basic steps that can be used by any beginner to develop their small savings and gain major profits.
1. Figure out your financial risk.
If you want to start saving for you to invest, you will have to do a financial assessment of your savings for the next 6 months, at least. How much can you place in the stock market? Ikiungua, will you still have some cash left to make you feel safe? It's like planning for a date. If it works out or not, you still have a back-up plan..
If you've already saved up and are ready with your 20%,good. Take the same 6 months to save up some more and place your other 20% on other companies. It's an advantage to you because you will have prior knowledge of how to maneuver the market.
2. Examine the risks, if it's high or low.
Risk means the likelihood of you loosing your money. Probability. This depends on how you look at a company's stock price and how it's performing. For example, if the company is performing well and has a relatively stable stock price, that's a low risk. If the company is struggling to improve its business and has a low stock price or the company has good business but are being faced with difficulties and has a high stock price, that's a high risk.
You can use your own psychology or use automated systems to do this analysis. Data required with AI's are time spaces and human decisions made during these time periods. They predict how companies are able to handle external situations created by investors with time. ~major tip btw
3. Put your bets on different companies.
Placing all your money on one company is not a good idea. It can make you hate stock even when you haven't started. Most people who make the most out of stock market use the ideology of diversity. They put some cash in extremely risky stocks and the rest in low risk stocks. They still win in the long-run. Plainly, don't put all your eggs in one basket.
4. Be able to withstand your emotions.
Investing due to trendy information can be a good and bad thing. One day a product/service might be the talk of town and the next day it might become the joke of the town. What matters the most is the knowledge and understanding you have of the company and how strong it's foundation is. In the long term, It still able to give its shareholders returns on their stocks~what they deserve.
5. Take a look at the company's volatility.
This is to curb your emotions from making bad decisions. Find out how a company performs by how it falls and rises in the past 10 years. The fall and rise percent should be somehow equal so as to define it as a 'stable stock'.
6. Buy a stock when it's low and sell when it's high.
This might seem obvious. However, take this example into perspective. You bought a stock when it was at it's lowest and it has gained in value. Keep it? Yes..maybe. Sell it? Yes...definitely. You have already made your money. Keeping it there increases the risk of it loosing value if the stock price reduces. Invest in another low stock that you know is likely to go up too. This creates a balance on the number of losses you might have incurred.
7. Learn the investing language...intensively.
To be on top of your game at every single decision, you have to continue learning the game and language being used in this business. It's not hard, it's just logic. Learn about dividends, different period yields, year-to-date performances and more. Business Daily, Cytonn Investments and National Securities Exchange are some of the sites you can visit. Remember, it's business. It's always dynamic.
8. Always be attentive to advice.
While reading up on investment strategy is helpful, the best advice comes directly from a human being who can tailor his or her advice to your specific situation. Investment firms have financial planners eager to work with investors of all income levels and investment experience. Don’t be afraid to ask your friends about where they get financial guidance from. Lastly, believe in yourself. Your decision has to come from you and not anyone else.
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