The opposite of a saver is an investor. Dont be a saver, learn to be an investor.
~ Robert Kiyosaki
I love this quote from Robert Kiyosaki author of the bestselling book Rich Dad Poor Dad.
Now the first question will be. Why we need to invest our money?
And here is my simple answer. We need to invest for the following reasons:
1. To combat inflation. For those who dont know yet, inflation slowly degrades the value of your money. Its like a thief that nobody can stop.
2. To grow money.
3. To attain financial freedom.
4. To retire early and enjoy life more.
Investing can be done by everybody. It doesnt require any degree or high expertise in business or finance. No matter what profession, you can invest.
There are lots of ways to invest your money:
You can buy Gold and wait for its value to increase.
You can buy a Land or Real Estate.
You can put your money in a Time Deposit (if you are very afraid of risk).
You can buy Insurance.
You can join a direct selling or networking business (Not recommended for shy type persons).
You can let a fund manager grow your money. Like mutual fund, etc
Those are few examples but this article is all about Investing in the Stock Market.
What is a stock market?
Laymans term, stock market is all about buying and selling part of a company usually through stock exchange. The part that you bought or sold is called stocks or shares.
Owning a stock makes you a shareholder of that company.
Basically, a shareholder of a company makes money through:
Dividends the company shares its profit to shareholders depending on the amount that you own.
Growth when the company grows, the value of your share increases. Thus, you can sell it in a higher price.
How can I invest in the stocks?
Before investing your hard earned money, take note of the following first:
Research if Stock Market is really for you.
No matter how promising the venture is, you need to research about it first.
The internet can provide all the information you need to know about stock market.
After all the research, ask yourself and decide if Stock Market is for you.
If the answer is yes then lets proceed.
Learn to save money for investment.
Below are some famous golden rules in saving. Everybody knows it but only few people are applying.
1. Do not spend more than what you earn.
2. Your lifestyle should not be equal to your salary and it should never be above your salary.
3. Save minimum of 10% of your salary every month. But 20% of your salary is the recommended amount.
4. The right computation is Salary Savings = Expense and not Salary Expense = Savings. If you follow the second option, it will be difficult for you to save money.
5. Finally, invest a portion of your savings.
Choose a Stock Broker.
Stock broker are the one who will buy and sell shares for you. With a small management fee, they will save your precious time and energy.
In choosing a stock broker, you should consider the following:
Should be Trustworthy
Can provide the best investment guides
Has superior customer service
Small management fee
Buy great companies only.
As investor, choose Great Companies only.
Great companies are stocks that can work profitably in good times and bad times.
Leave the high risk high rewards stocks to experts who spend most of their time looking at the charts.
Distribute your resources.
Do not put all your eggs in one basket
– Warren Buffet
Above quote from the worlds best investor, minimize the risk by investing on multiple companies.
Buy multiple great companies in different industries. It is a simple and effective strategy of successful investors.
Finally, start as early as you can. The earlier you start the better profit.