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Monday, December 21, 2009

Stock Market: Ideas And Tips

By Johnny M Junior

For those of us who have for long nurtured dreams of holding shares in a company the stock market is the perfect place to start. Investment is all about taking a sum of money and using it to generate more money. So the stock market has been targeted by a large number of investors who are either too busy or short of enough capital to start their own income generating scheme.

The very first thing you should know is that the stock market is a very unstable arena where prices change and fluctuate several times in a week. Owing to this unpredictability it can be a risky option to invest in the stock exchange. Today a share might go for $3 and the day after the price would have gone down to $0. 50, anything can happen. With that in mind you should plan your investments carefully so that you don't lose out on hard earned money.

Having realized that the stock exchange is unpredictably uncertain you must start by investing a small amount of money before you go big. Starting small has always had the benefit of giving a good vantage point from which to observe trends and influential market forces. So once you have held stocks for a good year you can then decide on how much more to invest and in what.

But before even making that small investment you must make sure that household expenses have been catered for. Take your pay cheque and receipts for last month and begin to budget for your investments. This is because you don't want the unfortunate circumstance where you have nothing left midway into the month. The excess after the budgetary planning is what you should only invest.

Like I mentioned before you must be slow and careful when you're still learning. Do a substantial amount of research first before you decide on what you're really going to invest your money on. There are the monthly; yearly or quarterly reports issued free of charge with explanations and trends that dominated the stock market. Another source of research material is the bestselling books written by people who have made marked fortunes on the stock exchange. To further increase your knowledge you can read magazines on the stock exchange. With that said let's move on to present market trends and how they can give you an idea of how to react.

At the present moment precious metals are gradually rising. Four months ago gold was pegged at about $950 but now gold is being sold for over $1200 per fine ounce (28grams). So if I were to invest in a commodity it would definitely have to be gold because it has been rising so steadily that there are no fears of a sudden crash. Another metal following behind is silver.

But one must be wary of investing in commodities that are rising in share value. The reason for this is that a high is normally followed by an all time low. So when it comes to the oil price that has risen considerably following the fall in the US Dollar, it is important to remember that it can also fall drastically.

I would also recommend that you refrain from investing in certain things. Such examples would be ETF's and mutual/shared funds. These can be very unpredictable at times. - 23208

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