Online stock trading can be an easy way for you to earn income from the luxury of your own home. Not many people have the knowledge that can help them to succeed and rely upon brokerage house to maintain their interests. There are some simple mistakes that can result in massive losses and loads of missed chances. There are two mistakes that you should avoid at all costs if you are thinking about investing in the stock market.
The First Mistake – Waiting Too Long to Start Investing
There is no minimum starting age to invest in the market and it has been suggested that starting younger is better. The traditional idea is that you are supposed to have plenty of money to invest in the market along with age and the wisdom it brings. This misconception has stopped many would be successful investors from fulfilling their potential and making lots of money on the stock market. Waiting as little as ten years can make a big difference to the amount of money you can make over your trading lifetime. By the time you are 75 if you started investing when you were 26 your investments would yield well over $2,000,000 dollars and all you would have to invest was about $170 per month. This is counting on a steady ARR (Annual Return Rate) of 10% throughout the life of your investments. Starting when you are 36 and taking into account the same ARR on the same investment instead of being worth over $2,000,000 your investments will only bring in $800,000. That is a massive 1.3 million little reasons to start investing earlier. It is a great idea to set aside an amount of money that you can afford even if it isn’t $170 per month. The money you put into your investments doesn’t have to be excessive, you can get good results on a small input.
Mistake Number Two – Know What You Are Investing In
Researching the stocks you are going to buy should be the first thing you do before putting you money on the line and yet there are so many people who know nothing about the company they have just become a part owner of. You wouldn’t blindly hire an employee without looking at the resume and calling all their references, so why would you blindly invest your money without looking at how the company has done in the past? It is crucial that you know what benefits you will get from the stock you are buying and know how it will effect your portfolio. It is also very important to remain impartial when choosing the type of stocks that you buy. Stocks that you bought because you liked the name or had a good feeling about are prone to doing worse than stocks that you have chosen based on research and careful planning.