Investing in the stock market is a good way to get started in investing. However, stocks are a risky investment, so it’s important to do your homework. Here’s a short primer on how to get started in stocks.
Decide how you are going to invest
There are a number of ways you can invest in stocks. You can set up a trading account, either with a traditional brokerage or with an online trading firm and invest in individual stocks directly. You also can invest in stocks through mutual funds. In addition, you have to decide whether you will invest in a taxable account or tax deferred account.
Decide your risk tolerance
Stocks can lose value, sometimes a lot of it, so you have to know how much risk you can tolerate. Small cap stocks and stocks of companies in emerging markets tend to have more potential for growth but also higher chances of incurring huge losses. Large cap stocks and stocks of utilities tend to carry less risk.
Do your homework
When in investing in stocks, make sure you have thoroughly researched your choices and feel comfortable with the decisions you are making. Your broker can help you or you can use an online stock screener.
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