Online Stock Investing

Before a person becomes involved in online stock market investing, there are several areas of investigation which would be profitable. There are many pages of information available to the would-be investor, and books, newsletters and seminars abound where one can get stock market investing advice. Before spending a cent of hard-earned cash, though, it is possible to do plenty of research of your own in the library or on the Internet. A general overview of the procedures involved in investing might be needed, as well as an idea of where to go to obtain stock market investing advice. Some free or low cost online tools even allow the investor to practice trades with games that simulate the stock market.

Set some boundaries before beginning to invest. Contrary to what some commercials for online stock market investing might imply, investing is not a miraculous source of easy money. Stocks do generally perform well for the investor over a long period of time, compared to some other investments. No investment is guaranteed to make a profit. There are always some risks involved and a person should not invest with funds which will be needed in the short term. In fact, a wise step for the potential investor to begin with is to get one's own finances in order.

Before seeking stock market investing advice, it would be prudent to take the time to investigate one's own financial situation. Unless a person knows how his or her money is presently being spent, and can apply wise financial procedures to eliminate credit card debt, it would be best to avoid the risks involved in online stock market investing. Until such discipline can be applied to current debts, no one could be expected to be able to deal with the more subtle and intricate layers involved in investing in the market. Debt is costing a certain percentage each month, so it is best to use any extra funds to eliminate that black hole in the finances. In the meantime, investigate ways to improve the situation. If an employer is offering matching funds for 401k contributions, this is an investment which has a guaranteed return, for the money the employee invests is immediately doubled.

Owning stock is having a small part of the ownership in a corporation. The stock market is generally broken down into a number of sectors, thus making it possible to compare how a company is performing relative to those in similar businesses. Any significant differences should be investigated. Reports can be obtained from companies to ascertain the health of a company or to be made aware of future plans which may affect investment decisions. Hours of work can be saved by utilizing stock screening programs to narrow down choices.

People invest for several types of reasons. One philosophy is investing for growth. Perhaps a company shows signs of becoming outstanding in its sector. Selling shares may allow it to obtain the capital needed to expand, without going into debt. In return, the stockholder can vote on members of the board of directors and share in major decisions, as well as possibly reap dividends. Risk is involved in that more businesses fail than succeed.

Another reason to invest may be for value. The investor comes to realize that the company's product or service has seemingly been overlooked, and that it is only a matter of time before the stock's value will rise. Careful research is necessary, though, to be sure that this is really the case and that there are no underlying problems which may limit success. The most conservative philosophy of investing is simply the desire to obtain income from the stock. These investors seek companies which will pay decent dividends on a consistent basis. Of course, many investors use a combination of these reasons during their lifetime. A younger person may be more willing or able to shoulder a larger proportion of risk in order to reap the possible benefits, while an investor approaching retirement may choose to invest more conservatively. One's philosophy and life situation may also influence whether one chooses to invest through a discount broker or employ a full-service broker. Both are able to make trades; the latter will also research various investments and give stock market investing advice. Be careful to check for details pertaining to fees or other services before signing any contracts. The final say in investing money should remain in the investor's hands.

Remember that when stocks plunge, unless the investor actually sells the stock, the loss is only on paper. The likelihood of a healthy company eventually rebounding is substantial. The art of online stock market investing lies in being able to hold onto the shares long enough to realize a profit, and, in a downturn, being able to sell before losing the value of the investment. Each investor must set a reasonable percentage to guide decisions about buying or selling. Be careful not to succumb to greed, which can be destructive and lead to repercussions in other areas of life. As Jesus warned in Luke 12:15, "...Take heed, and beware of covetousness: for a man's life consisteth not in the abundance of the things which he possesseth." If the investor is careful to do the proper research, to spend only funds which are not needed for daily living expenses, and to guard against greed, online stock market investing can remain one of a series of wise financial decisions instead of becoming a stressful and consuming chase after elusive riches.