Investing in Stocks: Strategies for Success

Investing is a time-tested way of making your money work for you. And “time” is the key word – the earlier you start, the faster your investment will grow, thanks to the miracle of compound returns.

Whether you have a few thousand to put away or can only manage $20 a week, now is the right time to start.

Keep in mind that there’s a lot that you can and should learn about investing in stocks to achieve proper financial success.

Here are some basics:

1. Define your risk tolerance

What’s your tolerance for risk, the possibility you may lose money while investing? Stocks are generally categorized in several ways, such as large capitalization stocks, small-cap stocks, aggressive growth stocks, as well as value stocks. They all have different levels of risk to them. Once you determine your risk tolerance, you can set your own investment sights on stocks that work for you. 

2. Decide on your personal investment goals

You need to determine your investment goals before you get started. When opening a brokerage account, an online broker will ask you about your personal goals as well as your investment risk.
If you’re just beginning in your career, an investment goal you could set would be to increase the amount of money in your account. If you’re older, you may want to continuously generate income as well as grow and protect your current wealth. Your investment goals might come with buying a house, funding your retirement, or simply just saving for tuition. Your goals can change over time. Just make sure to review and reevaluate them as your life changes

3. Determine your investing style

Some investors take an active role in managing their investments, while others prefer to set and forget. Your preference may change but make sure you decide on an approach to get started.

When deciding your strategy, consider online resources such as Certus Trading, mentored by veteran trader Matt Choi. Certus Trading is an online mentorship platform for people who prefer the swing trading style. You can also consider Warrior Trading online, which has a day-trading approach

If you’re confident about your investing capability, you could manage your investment portfolio independently. Traditional online brokers allow you to invest in stocks, bonds, exchange-traded funds, index funds, as well as mutual funds. 

An experienced broker or advisor can help you make your investment decisions, monitor your portfolio, and make changes as necessary. This is a good option for beginners who understand the importance of investing but need the help of an expert to do it.

4. Learn to diversify

Diversification is an important investment strategy, allowing you to spread risk. Essentially, by investing in multiple assets (diversifying), you reduce the risk that one investment’s performance can really hurt the return on your portfolio. 

It can be hard to diversify when investing in individual stocks if your budget is small. If you only have $1000, you may only be able to invest in a few companies, which comes with greater risk. This is where ETFs can help. Both types of funds tend to own a larger number of stocks and additional investments. This makes them a more diversified option than picking single stocks. 

If you want to advance your knowledge, consider some of the resources we recommend. Review Certus Trading and Warrior Trading as well as several other platforms to discover what makes the most sense for you and your trading style.