People seem to think that investing in stocks is akin to gambling. Totally not, if YOU aren’t the gambling type. Imagine one of your acquaintances ask you for some money to start a firm in exchange for a share of the firm. You would give money only if you feel the firm has a chance of succeeding, right? That’s exactly what you do when you buy stocks; you are buying a certain percentage of the company. So if you go for a company with strong financials, you will make a profit in the long term (think 5 years+).
How do you identify a company with strong financials? Not by following the advice you hear from people around you who seem to know all about stocks, and definitely not from hunches given on screen. You’ll have to do a bit of learning – the basics like the lingo and where you can get information and such. And then you buy your first share!
I like the thrill of buying stocks myself, and I have noticed that I make slightly more money when I do it on my own. Therefore, most of my savings go into stocks. After a few years though, I found it hard to spend time evaluating companies and finding good investment options. That’s when I was introduced to MoneyLife Stockletters. I was a little skeptical at first (I don’t believe in ‘expert analysis’), and these guys were changing 2.5k per annum to give me a report that I’ll use to invest a few thousand per month. But it had been recommended by a friend who was very careful with his money and most of the reviews online was good (didn’t break off “don’t follow the advice you hear from people around you” by doing some research myself).
If you enroll for their stock letter subscription service, they send you a report listing stocks they recommend (read the instructions that come with the letter) every Saturday. They have 3 variants depending on your appetite for risk (I go with Panther. Says a lot about me, doesn’t it?). It has worked well for me so far – I don’t have to spend time on research and analysis, and I get good returns.
Now if you don’t want to take the pains of starting a securities account and the trouble of bidding for stocks, you should stick to mutual funds. They give slightly lower returns, but the risk involved is also lower. And if you are confused about where to go to find the best mutual funds, you should check out ScriptBox. They make investing in mutual funds painless and easy. You should check out their blog section too – they have some good articles to keep you true to your investing path.
Generating wealth takes time. I know you’ve heard that many times, but that’s the truth. You stay away from a ‘get rich quick’ scheme, don’t you? Same goes for a stock that is ‘going to triple in the next 30 days’.
So start off with mutual funds. Learn about stocks, do a few ‘mock’ investments, and choose what fits you best.