When it comes to stock investing, many people will be freaked out with all the stories of individuals losing all their investment amount. These individuals may not be investing stocks correctly and thus resulted in losing their hard-earned money.
Doing stock investing the right way is an almost guaranteed success as stock investing is actually very simple and easy.
But what is the right way?
As always mentioned, investing is a long-journey. The longer you hold on to your investments, the better returns they can give you.
In one of my earlier posts, I had done a simple calculation for dividend investing and showed how an annual investment of $6,000 is able to generate a passive income of $37,496.87 in dividends in 20 years.
20 years is not a short period. For a person who is in his mid-thirties, by the time the 20 years period is up, he will be in his mid-fifties. Just in time for his retirement.
If you start your investments early, you will likely be able to retire comfortably earlier.
Read more: Start Early
Do Your Homework
Stock investing is not about following the tips from stock-advisers. These people are mostly analysts who analyse the market and give their take on how they perceive the stock price will react with the market situation. They may not even be investing in the stock market themselves.
Stock investing is also not about following what the gurus are buying. The portfolios of investing gurus, like Warren Buffett, can be found online. They have good track records on their investment and it seems very tempting to just copy what they invest. However, unless you are able to read the minds of these gurus, you may never know why they picked these stocks in the first place which might be the very reasons why they will exit their positions.
Doing your own research on the companies you are about to invest in is a very important step for a stock investor. When I was deciding on whether to invest in Coke or Pepsi shares, I did my own homework and chose Pepsi eventually, even though the guru of investment, Warren Buffett, owns Coke shares.
Read more: Dividend Investment: Coke vs Pepsi
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