Steps for New Investors

Steps for New Investors

All new investors will always ask about what kind of "individual" stocks they should be investing in. I know they will more than likely lose their invested money and lose it quickly. There are few main steps, in my opinion, every new investor should ask themselves before they invest in anything.

Step 1:

Do you have an emergency fund in place? Many people simply do not plan for the worst, and then when the worst happens they have no money to get them through their rough patch in life. Before anyone decides to invest in anything they need to make sure they have an emergency fund in place. This is to cover themselves in case of an unexpected life emergency such as the lose of a job.

Step 2:

Do you know anything about investing in the stock market? Many people see television shows that make it seem like it is so simple to pick a stock and make money off of it. Well that simply is not true. It is very difficult for any investor, especially a novice investor, to consistently pick winning "individual" stocks. If you have never invested in the stock market in your life; then you need to take the time to at least learn the basics or you will lose money very quickly.

Step 3:

Do you know how to pick the right broker? In today's fast-paced online trading environment there are many online brokers who offer very different services at very different prices. Commission cost can be very expensive for someone that wants to be an active trader. However, there is a trend in today's world that has brought on a lot of competition in the online broker world. A few brokers actually offer commission free trading, but of course they do not offer a lot of the trading tools offered by more expensive brokers. This means if you can teach yourself what you need to know, instead of relying on a brokers assistance, you will have a much more cost effective way of trading by using a commission free broker.

Step 4:

Do you have the time to pick the right stocks? In this fast-paced world spending hours looking over stock charts is probably not realistic. Which means today's average investor probably needs to make the decision of whether they should simply invest in mutual funds instead of "individual" stocks, or use a professional technical analysis company to assist in narrowing down their choices. There are a few good companies out there that specialize in this kind of assistance, but there are also a lot of bad one's as well. So investors should do some research to get some unbiased reviews of these companies. Every new investor really has to take the time to understand what they are getting themselves into before they invest any of their hard earned money. I have seen to many people jump into the stock market without any real knowledge of what they are getting themselves into.
About the author: Chad Surges has a Bachelor's Degree in Business. He invites you to visit his website for free information about different investing techniques and strategies: www.lucky-dog-investing.com

Knowledgeable investors can determine when it is time to get in and out of certain sectors. Once investors figure out which sectors are the strongest; they can then determine which companies within those sectors look the most profitable.

Bull, Bear, or Sideways Market :

So what is a Bull, Bear, or Sideways Market?Bull markets occur when the major indexes, the DOW, NASDAQ, and S&P 500, are all going up. (GOOD FOR MOST INVESTORS) Economy as a whole is in good shape and investors are willing to put money into the market.
Bear markets occur when the major indexes, the DOW, NASDAQ, and S&P 500, are all declining. (BAD FOR MOST INVESTORS) Investors are basically selling their shares for whatever they can get for them and the economy as a whole is not doing well.
Sideways markets are basically a point when the indexes simply stall out and they are neither going up or down.
Different variations of these trends have occurred at different points in the history of the stock market. The trends can be long or short depending on a wide variety of factors.

Sectors of the stock market :

As you watch CNBC you will hear the term sector being thrown around a lot. A stock sector is a group of companies that belong to a similar industry.
Some examples would be the retail sector, pharmaceutical sector, automobile sector, or oil sector.
No matter how well the stock market is performing overall; there will always be sectors of the stock market that are doing good or bad at different times for various reasons.

Know about transfer of physical shares.

After a sale, the share certificate along with a proper transfer deed duly stamped and complete in all respects is sent to the company for transfer in the name of the buyer. Once the transfer is registered in the share transfer register maintained by the company, the process of transfer is complete.

Buy back

Buy back is a process by which a company can buy back its shares from shareholders. A company may buy back its shares in various ways: from existing shareholders on a proportionate basis; through a tender offer from open market; through a book-building process; from the Stock Exchange; or from odd lot holders.
A company cannot buy back through negotiated deals on or off the Stock Exchange, through spot transactions or through any private arrangement. Clearing and Settlement.

stock split

A stock Split is book entry wherein the face value of the share is altered to create a greater number of shares outstanding without calling for fresh capital or altering the share capital account. For example, if a company announces a two-way split, it means that a share of the face value of Rs 10 is split into two shares of face value of Rs.5 each and a person holding one share now holds two shares.