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Make Your Money Go Further With These Stock Market Tips

By Expert Author: Ronnie Lester

The stock market can be exciting for all investors. There are many avenues to profitability which all depend on your goals and the amount of money you can risk. However you invest, you should have a thorough knowledge of exactly how the market operates. Here are some investing tips that will help you do just that.

KISS (Keep It Simple Stupid) is a phrase that can definitely be applied when you are making stock market investments. Your philosophy of investing should be easy to understand. The stocks you pick should be things you understand. Do not take on undue risk, much like you avoid blowing your whole paycheck on lottery tickets. Keep things simple.

If you have common stocks, be sure to use your voting rights. While each company differs, you may be able to vote for directors or for proposals that involve major changes like merging with another company. Voting can be done at the yearly shareholders' meeting or by proxy voting through the mail.

Be prepared with a high yield investment account stocked with six months of your salary that you can use in case of an unexpected problem with your finances. In the event that you lose your job or are involved in an accident, your regular living expenses will be covered.

Treat your stocks as if they are and interest in your own company, instead of just tickets to trade. Take the time to analyze the financial statements and evaluate the strengths and weaknesses of businesses to assess the value of your stocks. By delving into the nuts and bolts of a company, you get a closer look at where your money is going.

Although most portfolios are long-term investments, you still want to re-evaluate your investments about three times a year. The reason for that is the economy is changing frequently. You may find that one sector has begun to outperform the others, while another company could become obsolete. Depending on the current state of the economy, certain financial companies may be wiser investments. So, it is crucial to follow your portfolio and make any needed changes.

Damaged stocks are okay to invest in, damaged companies are not. A bump in the road for a stock is a great time to buy, but the drop has to be a temporary one. A company who couldn't keep up with demand, for example, will only be facing a temporary setback. But, companies that have been through a financial scandal might never recover.

Purchase large, popular stocks. If you're a beginner, start with lower risk or low beta stocks. Once your portfolio is established, you can add some diversification with smaller or mid-sized stocks. While smaller companies can grow faster, they also carry a lot more risk.

Don't invest too much in a company where you are an employee. Although you may feel a bit prideful about owning stock from your employer, there's risk that comes with doing this. Should something happen to the company, both your paycheck and that portion of your portfolio are in danger. If your company gives you a discount for purchasing their stock, it may be worth the risk to have a portion of your portfolio contain your company's stock.

Investing in the stock market can be a fun and exciting opportunity no matter what you decide to do. Whether you invest in mutual funds, stocks, or stock options, apply the fundamental tips laid out here to help you get the returns you want to see from your investments.

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