Scared of taking the plunge into investing? Putting money into stocks can be extremely intimidating, whether you’re an experienced day trader or a complete novice testing the water on a trading app. When there’s money on the line, you want to do everything right.
Part of the problem is that the less you know about investing, the more there is to learn. Unfortunately, it’s not always as simple as cracking a book. Investing involves a lot of trial and error … which means it also involves a lot of stress, and sometimes a lot of obsessing.
And, chances are, you will make plenty of mistakes when you first start out. That doesn’t mean you’ll lose it all on a bad stock gamble, though. If you get educated on the answers to some of the more common newbie investment questions, you can learn from other people’s mistakes before you dive in. Here’s what you should know to tackle the challenges coming your way.
How do I stop stressing over my investments?
It’s completely normal to check your investments over, and over, and over again when you first start out. You’re putting money into something that could rise and fall in minutes — so who wouldn’t want to know where it’s at 24/7?
Here’s the deal, though. While you can and should check in on your stocks, you don’t need to check them all day, every day. You’re just going to drive yourself mad every time you see the stock take a nosedive.
And nosedives are completely normal with stocks! They fluctuate from minute to minute, hour to hour, and day to day. The market is its own beast, and you should try not to obsess over what’s happening with your investments. Check-in, make sure it’s all good, and then let it go. You’re in this for the long haul, and you will have ups and downs. If you get uncomfortable with the trends, sell and move on. Staring at the screen won’t change it. You’re not that powerful. (Yet.)
How can I avoid losing money?
Here’s the thing: you can’t. The reason you can make a ton of money by investing in stocks is because it’s a gamble. You will probably lose some money from time to time, but if you diversify what you’re investing in, you’ll probably compensate for your losses. Think of it as a marathon and not a sprint.
It’s going to take some endurance and some extra muscle power, but you can get to the finish line. Sometimes you win that race … and sometimes you don’t. Don’t invest money you can’t afford to lose, and don’t put yourself into credit card debt to try and pull off your investment strategy, either.
Be smart, cover your riskier investments, and if you manage to get to where you win more often than you lose, you’ll be golden.
How can I avoid the temptation of putting money into new stocks?
There has been a lot of buzz lately over meme stocks and exciting IPOs or unique investment opportunities that promise a high return. The best advice? Do not fall for them. Your original investment strategy is your best strategy, and these other things are just distractions.
Anything — stock or otherwise — that promises you a quick and high return is probably going to disappoint in the long run. Could you miss out by passing up 10,000 shares of that penny stock that’s being shorted? Sure. But you could also avoid losing thousands of dollars on a bad investment, which could end your newbie investments as quickly as they started.
The risks are just too high to jump on board with those trend stocks, and in reality, there’s a good chance that the new IPO you have your eye on is a dud. Stay away from it and trust your initial gut instinct instead.
What if I miss the best buying or selling window?
Bad news: you will. Everyone misses this window from time to time, and if you’re going to start getting into stocks, there will be times when you miss it, too. And you know what? It’s not the end of the world.
Sure, it’s not optimal to buy too high or sell too low, but that’s why you lower the risk and diversify your stock investments. That way, if you land on your face with one stock, you’ve got others to help buoy you back to the top.
Can you mourn the loss of that theoretical money you would have made if you’d held on to your stocks rather than selling? Sure. But if you don’t take risks you can’t handle, it won’t be a make-or-break thing. You get back up and keep on trucking until you get it right. And believe it or not? You will get it right.
In time, you will learn when the best selling and buying windows are for the stocks you have your eye on, and you’ll take advantage of them at the perfect time. It’s just going to take some trial and error to get there, but the payoff will be massive, both for your wallet and for your confidence in investing.
What if I can’t hack the bad times?
The stock market is basically a living, breathing investment machine. You cannot control it, and there will be days, months, or sometimes even years when the stock market takes a dive deep into the red. Your stock prices will plunge, and you’ll see your gains drain away as it does. This is all normal. But, it is also all scary, so try not to freak out when it happens.
Go into this new investment plan with the understanding that the market cannot be controlled. You’re taking a risk to make money, plain and simple. When you get the urge to pull your money out when it tanks, fight it. You’ll be selling at a loss, and you’ll be kicking yourself later when the market recovers. And guess what: it always recovers.
Here’s to the Wellness of Your Wallet!