Investing (part one)

If you are ready for investing your money, it’s because you have mastered the technique of saving and making money. Investing is for two primary reasons. One, to build wealth! Two, to build wealth faster! Those two explanations are the main reasons for investing. Before you can start investing you should have an understanding of money, how to use strategies to develop it, and how it is controlled or kept under control as it relates to your debts.

Investing is a very important part in the process of building wealth. This is how that dollar turns into two and also how that one hundred dollars turns into a million.

Anything can be an Investment:

Anything can be an investment. You do not have to have your money in the stock market for your money to be considered as an investment. Anytime you buy something at one price and then sell that same item at a higher price, it’s considered an investment.

Do not limit yourself to only investing in the stock market. You should be buying and selling anything you can get your hands on to resell. You should be very diversified by using any investment vehicle you can find to make your money grow. You should consider using all types of investments including the stock market to increase your wealth. The ultimate goal is to make money as easily as you can where you do not have to work hard at making that same money.

Invest in yourself:

Your first investment should be in yourself. This will be your greatest investment. You can not afford to cut yourself short in this investment. It is very important that you Invest in yourself wisely by learning everything you can to improve yourself and your knowledge to help you become a better investor. I can not emphasize enough on how important this step will be in the process of investing.

 Being a smart Investor

Being a smart investor will make the difference in your ultimate success. You must become a wise investor to create wealth. Investing wisely is the key to your success and this technique must be mastered. You should do your research before investing your money. You should analyze your investment prior to investing your money. You should also understand the risks involved in the investment before investing your money. The way you determine these factors is by doing your homework and research before making the investment. This applies to any type of investment no matter how small or large the investment is.

This is the knowledge that determines wealth from barely surviving, or living paycheck to paycheck. You must know the risks involved in every investment. Rule for investing: if you can not afford to lose the money, do not make the investment. Here’s the problem; if you never take the risk, you will never make any money or build any wealth. You must take some risk to make money. You can minimize the risk by analyzing the investment prior to the investment but even then, any investment can fall apart and lose money. Doing your research minimizes your risk but does not completely protect your investment. You must remember the rule; do not invest the money if can not afford to lose it!

A Few ways to Trade Stocks:    

The secret to stock market investing is to buy low and sell high. That’s the answer you will often get when asking a stock market guru. The reality of this statement is very true. The stock market can be your best friend or your worst enemy. It all depends on your profits or your lost money.

Let’s go into some strategies.

Penny stocks will offer you fast cash on little gains because you can purchase several shares of stocks. This is what day trading is all about, making the daily profits.

Example:  Let’s say stock “ABC” is trading at One dollar per share. You have one thousand dollars to invest into this stock. For this example we are going to leave out the commission fees. You can purchase one thousand shares of this stock with your money.

1000 shares of “ABC” at a dollar per share will cost one thousand dollars.

If the price of this stock only goes up to ten cents, you make one hundred dollars profit on that trade. In this example we only had one thousand dollars, but think about it if you had several thousand dollars in that one stock, your profits would increase. That’s how day traders make a living in the stock market.

Example two: Let’s say company “DEF” was trading at fifty dollars per share and you only had one thousand dollars to invest. You could only purchase twenty shares of this stock. If that same stock went up ten cents, you would only make two dollars of profit.

What this example means is every stock has its own strategy. Different strategies should be utilized with different stocks.

The fifty dollar stock would probably do better by holding for a long time while buying stocks in this company every month hoping on stock splits and dividend payouts. When buying higher priced stocks in quantities, you must first have the money to buy them and then make sure it will be a good investment.

This is why practicing stock trading is very important. You must know the strategy before buying the stocks. You must utilize a certain technique to be profitable. Practice trading will be crucial in the process of becoming a great stock trader. 

There are numerous stocks that often trade between certain figures, also known as channels. Once you are able to locate these stocks, you will make a lot of money in the stock market. Most of these companies will be penny stocks but you can find larger companies trading the same way.

If a stock is constantly trading between one and two dollars, you should always buy in at a dollar and sell close to two dollars. Most of the stocks you will find trading between these figures will trade this way for a year or two before going upward. This technique alone has made me money in the stock market.  

Another technique you can use when buying higher price stocks is to buy a certain dollar figure of stock in one company every month, over a period of several years. The dollar figure is important. Let’s say you want to invest two hundreds dollars every month on stock in this one company. The price of the stock is not as important as you continuing to purchase it every month. The stock’s value might change up and down over the years. You do not have to worry about the price of the stock because you made the decision to spend two hundred dollars every month on the stock. Some months you will get less amounts of stocks while other months you will get more. This all depends on how much stock you can purchase for two hundred dollars. What ever your two hundred dollars will buy, that’s what you purchase for that month. This technique is called stock cost averaging. What this means is, the cost of the stock was based on an average price when the stock was purchased over the long term, not the monthly price of the stock. This figure is calculated by total cost and the total number of shares. There are a lot of people using this technique and they will have a great retirement when that time comes.  

Article by: Dynamic Publishing  (c)                                              

                                                 Investing Part Two

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