I’ve recently (in the past year or so) been investing slowly into the stock market. This article will share my non-technical tips for anyone looking to get started in investing in stocks.
A lot of what I’ve learnt has been through Jason Coleman, and I always ask for his opinion on stocks and how companies are doing and future valuations – he’s pretty smart.
I don’t do any technical analysis of stocks, I do follow news
TL;DR
- Using Easy Equities as my platform.
- Invest money you’re okay with losing.
- Don’t invest if you don’t have a ‘rainy day’ fund.
- Invest in companies you believe in.
- Long term investment (3-5 years+).
- Try out an ETF.
- There’s no risk free investments.
Using Easy Equities For My Trade Platform
Easy Equities seems to be a great platform as it offers you stocks in the JSE/NYSE and NASDAQ sector. Which means you can invest in South African Companies or US companies such as Tesla ($TSLA), Apple (AAPL) and more.
Easy Equities also has low fees (when comparing to other platforms) and kinda a pay-as-you go pricing on buying/selling stocks etc.
The platform also makes use of Fractional Shares, which means you don’t have to buy full shares. You can buy a percentage of a share, from as low as R5 per buy instruction. This gives you the flexibility to invest in amounts that works for you.
* Signup using the button above and earn R50 towards your account. FICA is required.
Invest Money You’re Okay Without
Don’t, and I repeat, don’t invest all your savings in the stock market or crypto currency thinking that you’re going to get a better return than a savings account with a bank. You could, but you can also lose a lot of your money.
Invest amounts that you are okay with losing, if a company you invested had to tank the next day at least your retirement fund won’t be affected.
Have A ‘Rainy Day’ Fund
It’s important to have a savings pocket that you are able to access from your bank immediately or within a specified period that works for you. If you don’t have a ‘normal’ savings account – I recommend looking into a budgeting/savings plan for those difficult days.
Don’t even look at the stock market if you can’t afford it. Play it safe.
Invest In Companies You Believe In
There’s always a lot of hype around finances and what’s working. A lot of the Tesla ($TSLA) rally is due to hype (in my opinion – but they are doing great things).
I find it difficult to keep track of South African businesses, and prefer to dabble in the ‘big leagues’ with US stock such as Microsoft (MSFT), Amazon (AMZN) etc. This is just a personal preference.
Follow the financial news closely, and make use of a stocks app (like the default Apple Stocks app). This links to useful news articles and forecasts.
I also am keeping my portfolio in the tech industry for now, as I know more about these companies than the travel industry for example.
In It For The Long Run
Stocks can be short-term trades like < 6 months. However, I’m in it for a long-term trade and expecting returns in 5-10 years+ (If all goes well).
Don’t worry if your stock dips, keep following the company and see why and look at it as an opportunity to buy more stock at a better price.
Stocks also run during business hours as the market closes around 4pm and aren’t open on weekends. Not like crypto, where you have to check it every few hours.
Invest steadily and your investments should grow.
Invest In An ETF
ETF’s (exchange traded funds) are basically ‘baskets’ of stocks. Some ETF’s such as S&P 500 may hold stock for Apple (AAPL) etc where other’s may hold stock for different ‘big hitters’.
An ETF is managed and you don’t really have to do the hard-work in deciding what company to put your money with. These are great for people starting out in the stock market.
I’ve just started to invest with some ETF’s for the S&P 500 as 2019 year had a 31% increase in price. Meaning if you invested R10,000 you would have made R3100 for the year profit. That’s way higher than any bank savings account – it could have been negative as well. Only invest money you’re willing to lose.
Risk-Free Investing
There is no such thing as risk-free investing, no matter how companies promote this. If there were high return risk free investments, wouldn’t those be so popular Bill Gates, Warren Buffet and all other business people just do that?
There is always some form of risk when investing, however things like ETF’s or following some investment strategy helps reduce risk. If a company says it’s 100% risk-free, stay away – something’s not right here.
