No doubt you have been on the receiving end of a conversation as friends related their story of how they made thousands of dollars on a hot stock tip
. Making money in the stock market has a very strong attraction.
The truth is you would like to make money investing too; you simply don't have the knowledge or experience to invest your hard earned money in financial markets.
No one is born with an ability to make money in the stock market . everyone who invest in the market was a beginner at some point. Perhaps you know enough about investing to insure you will lose money if you take the plunge
The number one falsehood about investing is that it is easy to make money. It is not. Investing properly in any stock or equity takes a significant amount of time and research. When you purchase a stock, you are not buying a lottery ticket. You are indeed investing in a company.
Many investors plunk down their money based on what people say, or perhaps what a stockbroker may suggest. The conversation goes something like this. Mr. Smith I have a hot stock tip!
Company ABC is ready to take off, the price is 10.00 a share and I know if you invest $ 5,000.00 you can double your money in 6 months! If that sounds familiar raise your hand!
Money is made this way everyday, just not usually by beginner investors. The only people that make money on these kinds of tips are the brokers who take a generous commission on you buy order, and eventually on your sell order when it doesn't work out.
Another common mistake among novice investors is to invest in industries they know nothing about. This is common with all investors. For example a Lawyer might invest in an overseas oil refining company. What does he know about oil refining? Likely nothing.
The Lawyer is chasing the high flyer, just like many investors, especially new beginner investors.You probably worked very hard to put yourself in a position to save up money to invest to begin with. Work at least that hard to learn what you are about to risk your savings on, before you invest. Consider paper trading stocks to learn how markets work.