A Beginner’s Guide to Growing Stock Market Wealth

Here is a quick lesson on the stock market for those readers looking for the basics before we dive into the action steps.The stock market has a very low barrier of entry. Almost anyone can own a publicly traded company’s stock and potentially grow their own investment account. Actively trading and investing in a successful company’s stocks helps to diversify your ability to create income instead of selling your time for money at a job.Companies raise money when they go public by selling their stock on the stock market through an Initial Public Offering. If a company has an IPO for 1 million shares offered at $20 a share, then they will take in $20 million if the market buys all their stock at the offering price. Once a company takes in the money.from their initial share of stock through the IPO, their shares trade on the open market and the price is determined by what investors and traders are willing to pay for the stock at any given time. The value of a company is set by the price of the stock multiplied by the number of shares of the stock that were issued. If a company has 1 million shares of stock and the price of the stock is $100 per share, the company market capitalization is $100 million, meaning the company is worth $100 million.

Investing Habits:
Take action: when you know what you need to do, don’t wait, do it today. The most important part of investing is to start and then develop the habits of consistent actions that will build your capital and net worth. 

  1. Is there anything you already know you have needed to do in your investment life?
  2. Is there anything you already know you need to do in your personal finances?
  3. Are there any investment accounts that you already know you need to open?

Getting things done will feel good, clear up the past, and help you move forward building good habits.

Other Habits:

Create and follow a plan. Invest in the stock market on a consistent basis by buying stock investments that meet your personal investing criteria, time frame, and goals.

1.What are your specific investing goals?

2.Are you investing for retirement? Then you need to open a retirement account or sign up for your employer’s retirement account. 

3.Do you want to speculate in stocks? Then you will need to open a brokerage account. Your priority should be commission price, because almost all discount brokers are about the same when it comes to execution and customer service. I would suggest going with a broker with a name you know and trust so your money remains as safe as possible. 

4.How much money do you want to put into your accounts? You can set up automatic payroll withdrawals into a 401K account with your employer. You can also set up automatic deposits into an IRA. You can also plan on putting aside a set amount of your income from salary and bonuses into your trading account at regular periods. You do need to make it a habit of depositing money into your investment accounts each and every month.This is how you will initially build your investment account. You will be paying your investment account like it’s any other bill, but instead of paying for a depreciating asset or making someone else money, you will be paying yourself.

The main reason that the average person doesn’t build wealth through participating in the stock market is that they never get started in the first place. Most people know that they need to open a brokerage account, an Individual Retirement Account, or contribute to their 401K, but they generally fail to do so. Most people’s favorite day to plan is tomorrow. For many, tomorrow turns into never as the days, months, and years go by.

Too often we wait for the perfect time to start learning what we need to do, and many never do that much. After doing the homework necessary, the hard part begins; you must start saving money, contributing consistently to an account, and actively investing. The best time to start an investment plan is always today and the second best time is tomorrow. It’s not always time to buy stocks, but it’s always time to have a plan on how and when you will buy them when the opportunity arises.Investing is a lot like losing weight. There is a lot to learn and you can study nutrition and exercise for the rest of your life in the pursuit of good health. But it’s not rocket science, and we know that we can lose weight and be healthier by lowering our food intake and increasing our activity level. The stock market is the same way.We know that we need to save money, put it in the stock market, and follow trends for long term capital growth. Most long term buy-and-hold investors have done well over the last ten or twenty years with little knowledge or in depth research. They participated in the stock market and got rewarded in the long term. I am not saying that buy-and-hold is the way to go, but that their ability to take action rewarded them greatly in the 1980’s and 1990’s.
Investing and dieting success are more based on behavior than knowledge. I have seen overweight nutritionists and I have also seen very intelligent hedge fund managers lose all their money. Success in weight loss and investing both come down to having the ability to consistently take the right actions and impulse control.You have to start the diet or the investment account for a chance of success at losing weight or building capital. The magic is in the first step, and you can only do that by getting started. Taking action and moving from the learning phase to the action phase opens up new possibilities for the future. Your first step is to get into the habit of taking action. Without it, nothing else matters.
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