DISCLAIMER: I AM NOT A FINANCIAL EXPERT OR ADVISOR, ALL CONTENT POSTED ON THIS WEBSITE ARE JUST MY FORMULATED VIEWS.
6) The Dips...
RED DAYS, them days where you are probably in the process of filing for divorce and your portfolio drops 5-10% because the NASDAQ composite got put in a spliff... wait, wait, wait, you panic sold?? *Sigh* This is exactly why they left you... this level of irrationality is the causing factor towards your cognitive deficiency...Right, that was harsh, I'm only playing, but moving on...
Well, the key is the stock market is not the roulette table my G... That's not how it works...
The key thing to do is buying and holding good valuable companies that you deem to be here the next decade...
Some examples: Tesla, Facebook, Apple, Amazon, Netflix, Google
Put it this way, if you can't see the company's future don't bother... On the other note, if you deem the company is going to be around in the next decade and you own shares and it DIPS, don't panic. The only thing to think about is: "Should I double down?"
E.G. If you bought company X at $100 a share and it dips to $70. Well if you liked it at $100, then you should love it at $70, so you should be willing to throw more...Don't bother with penny stocks...
Nowadays you can also fractionally invest with expensive stocks such as Amazon ($3000 per share) but say if you only have $1000, you can still fractionally buy 1/3 of a share of Amazon. But what's important to note here is if Amazon goes up 20% from $3000 to $3600, your $1000 still makes 20%, which is now worth $1200... you see where I'm going with this? So the key thing is to also carry out your own research and move from there.
Furthermore, there's a reason companies like Apple and Amazon have been around for this long...
7) Brokers
Right, so if you're following this you're probably asking: "How can I get started? Yeah, but how do I even buy a share?" Like I said relax, this ain't your wedding day. "Oh let me just go to apple.com and click on buy a share", erm...yeah let me know how far you get.
Yeah...thought so... Basically, there's this thing called a broker, back in the old days you would need to call a stockbroker to place orders on shares of companies you wish to buy, who would then place those orders, and then you would become a shareholder of that company...
LOL, that long asf process probably lasted more than your marriage. Thankfully, you don't have to go through that long-ass process due to having online brokers instead. So you create an account on an online broker and you can buy shares through that.
I see you about to press "cmd+t" to create an account... as I said, relax, do you even know what you're buying big man? EXACTLY, research! Research! Research your company before you buy it, please!
8) What Do I buy
Who? What? What? What? Where? How did we get right here? Like NAW NAW NAW...
Did your research? OK, you saw Amazon had an amazing run-up so you thought you'd park your money there...STOP! Don't just look at run ups and past performance and park your money... AHH too late? You see that 3 and a half bands, can you afford to lose that?
Portfolio Diversification - Allocating capital to reduce exposure to risk to just one asset.
Stocks vs Index Funds
Know what's funny when I hear "Index Funds" and "diversification"? One of my good friends mentioned, "Diversification is for your grandparents". And that is also true, I mean go read back through my blog, most of these so-called "new investors" tend to quote Warren Buffet and say just invest in an Index Fund. I mean yes your exposure to risk is reduced, however, as they say, high-risk-high-reward", but if you carried out proper due diligence, you really have nothing to worry about.
Index Fund - A mutual fund, normally also classed as Exchange-Traded-Funds (ETFs) with a portfolio already established to track the performance/components of indexes in the financial markets such as the Standard&Poor's 500, aka. S&P 500.
S&P 500 - 500 largest companies in the U.S.
Below is the simplest way of explaining how this works:
1) Investors join and pool in money together
2) They make one big-ass Godzilla investor using a tracker
3) Tracker buys a market index (In this example, S&P 500)
4) The returns match the ROI of the index and minus the costs (A.K.A. Broker Fee)
Broker fees are normally low asf (0.x% mark) before you start panicking.
Top 30/500 the rest can be found on https://www.slickcharts.com/sp500.
Investing in an index fund means buying into the fund will spread and diversify your investments across these 500 companies. This way you have your finger in every pie, ay hands-off, and go jump on the treadmill.
BEATING THE MARKET
It's doable...but if you're trying to time it; aka. jumping in and out of stocks and indexes, just take your money to the roulette table. As said by a legendary former mutual fund manager Peter Lynch: "Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections than has been lost in the corrections themselves." Long story short, "Time in the market beats timing the market". Read that again.
9) Investing & Risk
My dad's uncle's father's grandson's cousin's wife's sister's brother-in-law invested and lost a lot of
money in the stock market and my mum told me "iT's ToO rIsKy".
*Sighs and pours whiskey into glass" You kids.
How do we lose money? Well only if you sell an asset/item for less than its original value; keyword: "sell", then definitely you've lost money.
Let me tell you something, you must have amnesia, remember what I said about buying/going long on good value companies? If not, go read back a couple of posts.
Using Tesla as an example (Post 5-for-1 split chart), You bought at $328.60 ($1643), it dipped to $283.40 ($1417) and you panic sold; you just bought high and sold low you clown. Had you just chilled and held on you would've made $498.32 ($2491.60), basically its all-time-highs. Now, do you see why it's best to play the long game?
One more thing, once you buy, stop checking ya damn phone! Also, Tesla is a strictly buy and hold, it's way too volatile, have you seen what happens to the people that trade/jump in-and-out of this stock? Just look up Jim Chanos and Gordon Johnson and Tesla. Long story short, buying-and-holding, and playing the long game has a significant ROI. Kinda like buying a house, only selling if you desperately need the money, I don't know like your baby mum chasing you down or your boyfriend needing quick cash because his broke ass got no liquidity to pay off creditors.
Also unless the world got put in a spliff, there is literally no way markets could crash to $0; and trust me you'll have more issues than crying about your portfolio, but this is unfathomable.