Tuesday, October 9, 2007

Learning The Stock Market-What You Need To Know Before Investing

Many people are interested in learning the stock market and how to make money with their investments. So what are the most important factors to making a fortune with the market?

First of all, you need to realize that you need to have a method of investment before beginning. Many investors simply jump in and start investing without having a clue what their strategy is or what they want to accomplish from it.

First of all, you need to sit down and think about what you want to accomplish with investing. Do you want a car by the end of the month, or is your goal to buy a house in 5 years? This will dramatically effect your strategy.

For instance, if your goal is to have enough money to buy a car in a year or so, you will want to invest conservatively such as a bond, something that is guaranteed to pay you money. If you need quick money, there are no guarantees in the stock market, and you are just as likely to lose all your money as you are to make it.

However, if you what to have enough money to buy a house in 5 years, your strategy will be to invest in the market in order to maximum your return on investment. While volatile in the short term, the market is very stable long term, and you can be much more sure of making a positive return on your investment.

If you do plan on jumping into the market as opposed to bonds, you need to determine whether you want to be a value investor or a technical analyst. Here is the difference: a technical analyst looks at trying to make more money short term with a particular investment, and is not concerned about investing in a company long term.

A value investor, on the other hand, wont invest in a company until they can be sure its long term prospects are sound and it has a solid financial future. Only after theyve seen this will they move forward and invest.

So which method is best? It really depends on which strategy you are more comfortable with.

Technical analyst requires constant studying of stock charts and you have to always be checking up on your investments. Also, one wrong move can literally wipe out your portfolio overnight, not to mention the money you have to pay for the transaction to begin with, which can often times wipe out your entire gain.

Value investing, on the other hand, is much more stable and requires much less attention to your investments because you are generally assured of making money in the long term. Therefore, you should only engage in technical analysis once you are absolutely sure you know what youre doing.

The bottom line is this: many people have money using either strategy. However, by far more people have lost money engaging in short term technical analysis than have made a fortune.

Therefore, you should look into both methods and decide which one works best for you. The most important part is to make a decision and not second-guess yourself. Simply commit and move forward as best you can, and in the long run you will make a fortune with the market.

For more info on how to buy stocks, and tips for investing in the stock market, visit http://www.stock-investing-tips.com, a popular site that teaches how to make a fortune from your investments.