How do you invest in the stock market as a beginner?


Quick Answer

A beginning investor should keep certain guidelines in mind for successful investing, such as knowing investment objectives, strategizing investments according to financial ability and deciding on the overall risk tolerance of investments, advises Investopedia. The beginning investor should also educate himself on the types of investments available such as bonds, stocks and mutual funds.

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Full Answer

Investment objectives are determined by a variety of factors including age, financial position, and personal or family circumstances, according to Investopedia. Such factors determine not just short-term and long-term goals but also details such as how much income is needed from investments. This in turn dictates the type of investments sought. A beginning investor's financial position creates the conditions not only for deciding time schedules but also the type of assets that can be purchased. Such conditions should also guide an investor on how much risk he is willing to take.

Once these issues have been addressed, a beginning investor needs to educate himself on the types of assets available and how each may enhance investment efficiency, explains Investopedia. Bonds are relatively the safest type of asset available for investment and should be considered by investors seeking investments with little risk. Stocks are much less risk-averse, but their returns are larger and in the long-term are relatively safe. Mutual funds allow beginning investors invest in groups of stocks at once.

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