Business

Five tips for getting started with stocks in 2023

Thanks in large part to the rise of online trading and investment platforms over the last decade, it has never been easier to take hold of your financial future and to invest directly in a wide range of financial instruments.

As a result of this shift, the trading and investment sector has never been more popular. According to recent reporting, the global online trading platform market is expected to grow from a staggering $9.6bn in 2021 to $13.13bn by 2026.

Online trading platforms have introduced a new generation of investors to the stock market, many of whom might have been locked out of more traditional investment paths over the years. Thanks to these revolutionary new trading platforms — which are usually accessed in app form — casual investors are no longer forced to use official, often bank-run, brokerage firms.

It is now easier than ever to get started investing in stocks. If you are one of the many millions of individuals looking to take charge of their financial future for the first time, here are some tips to help you get started investing with stocks in 2023:

Tip 1: Know what the economy is doing

Before you start investing in the stock market, it is important to have at least a basic understanding of how the economy works.

This doesn’t necessarily mean becoming an expert in all things macroeconomic. However, it is important to have a basic understanding what is GDP, how the stock market works, what causes inflation and other similar core concepts.

By understanding these basic economic concepts, you will develop a better grasp of what is going on with the economy. This information will be vital as you look to make your first investments in the stock market in 2023.

Also READ  Tailor Brands Review

This will be particularly important information to wrap your head around in the current economic climate, as rising living costs have a direct impact on what the stock market is doing.

Tip 2: Stick to funds

If you want to make your first investment but lack the knowledge or experience to choose the right company to invest in, sticking with mutual funds or exchange traded funds (ETFs) is a good idea.

Exchange trade funds are essentially an investment fund that buys individual stocks from an underlying index. So, when you invest in that ETF, it’s as if you are buying stocks from a wide selection of companies at once. These might be companies from the same sector or, in the case of the S&P 500, some of the current top-performing companies on the stock market.

Mutual funds are similar, but usually have someone actively managing their performance.

Mutual funds and ETFs are great options for beginners just getting started trading as they provide an easy way for you to diversify your portfolio and to lower your risk exposure. This is particularly important as a beginner, as you will likely not be knowledgeable enough to balance your portfolio.

Tip 3: Understand the tax implications

As the famous saying goes: the only two certainties in life are death and taxes. This is equally true when it comes to stocks.

In the thrill of making their first successful trade, beginners often forget that any profits they make will ultimately have to be split with Uncle Sam, who will happily take his share.

It is important to understand the tax implications of any investments you make as early on as possible. This might mean setting up a retirement account such as a 401(K) or an IRA, which offer tax advantages.

Also READ  5 IT Recruitment Strategies and Tips for Recruiters

Tip 4: Establish your risk tolerance

Another important step all beginners should take before investing in stocks for the first time is to figure out what their risk tolerance is.

Just like the name suggests, ‘risk tolerance’ is essentially a measure of how much risk you are willing to expose yourself to when you make an investment. It will usually reflect your age, experience level, the kinds of assets you want to invest in and the size of your portfolio.

Different stocks can also be categorized according to their risk profile. This includes both large and small cap stocks, high growth stocks and value stocks. Depending on how much risk you want to expose yourself to, one of these categories will be more suitable for you than others.

Figuring out your risk profile is an essential first step towards investing in stocks in 2023.

Tip 5: Think about your investment goals

Although the rise of online investment platforms has made it easier than ever to dabble in investing in stocks, most people start investing with specific goals in mind. This includes goals such as saving for retirement or planning for your future.

When you open an investment account, we always recommend using this as an opportunity to reflect on what your own individual goals are, as more often than not this will shape the kinds of investment decisions you make.

It is also important to reflect on and revise these goals every once in a while, as they will more than likely change over the course of your investment career!

Visited 51 times, 1 visit(s) today

Add Comment

Click here to post a comment