Investing in the stock market has never been easier than it is today thanks to stock market platforms where mom and dad investors can invest as little as $ 10 at a time. Compare that to investing through a stock broker where the fees make it unprofitable unless you can invest a few thousand dollars at a time. The problem with this is that unless you have tens of thousands of dollars to invest, diversification where the money is invested in a variety of businesses is out of the question.
The solution to this problem is with mutual funds, often referred to as managed funds, where your money is pooled with that of other investors. The fund manager invests on your behalf. The advantage for the common man and woman is that the fund manager who has experience in the financial markets will work on your behalf for a small fee.
Your money is invested in a variety of businesses and industries to minimize risk. Wealth and invest now
Sharesies is a popular trading platform in New Zealand but it is by no means the only one; Hatch, Kernel and Invest Now are others. In the United States, Robin Hood is a popular trading platform.
There are so many benefits to getting involved in the equity market in this way, the main one being that it improves participants’ financial literacy. Reading financial books is great, but knowledge comes from doing, otherwise what you may have learned on paper is just information.
There are several strategies that you can use to make money in the markets using online platforms.
I’ll tell you what I’m doing. I focus on one particular business per year and invest money in that same business on a regular basis, usually every two weeks. This way, I will buy stocks at the lower price when the stocks are going down. If an investor simply buys shares of a company with a single lump sum, there is a possibility that the share price may be high, which means that it will have to rise further to maintain the value of the investment when the inflation and fees are taken into account.
The stock I bought this year is Spark, a New Zealand telephone company. Last year it was Genesis Energy. I have not yet decided which company I will go to next year.
If you are ready to invest more money, you can choose more than one company. As long as you invest regularly, you will profit from low points in the market.
If you want, you can simply invest in managed funds. Sharesies has a range of options for this with varying degrees of risk. The rule of thumb is that the higher the return, the higher the risk. A wise investor will take this into account when deciding what to invest in.
The basic rules of investing should always be followed, such as not putting all your eggs in one basket and investing according to your goals. If you need the cash for the short term, investing in high yielding but higher risk growth stocks is not a suitable investment, as the stock price is likely to fall by the time you have need money.
Micro-investing is a great way to get involved in the stock market. It helps build your financial know-how, not to mention your wealth. This can be part of your wealth building strategy, so what are you waiting for?