Investing For Beginners

By Author: Lecia Selbo
Total Articles: 49
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Stock market investing can be tough for beginners. The media is quick to point out big losses, but rarely does it note on the long term gains, so it''s little wonder people get concerned about the stock market. It can seem like too much work as well, and something that you should get a fund manager to do for you.

Despite this, choosing your own investments and trading yourself isn''t difficult, and over the long term you can stand to make far greater gains than cash. Here''s a guide to investing for beginners. You can also make investments through stocks and shares ISAs ? take a look at Legal and General for these.

Long Term

Investing is for the long term ? and not for someone looking for quick gains. The longer that you can put your money away for, the more likely you are of making gains. Markets can be very extreme in the short term ? with occasional dips in value as well as rapid gains. Over the long term, this evens out.

One point to remember is that markets are far better than cash in the long term. For instance, if you invested ?1,000 in the value of the FTSE 100 when it first opened in the ...
... 1980s, even after recent stock market volatility, you''d be in good stead to be some ?4,500 better off. No cash account could comes close to this.

Buy Low Sell High

All too often people give into speculation and market volatility, and therefore buy when a stock price is rising, yet sell when it is falling. It''s important not to be governed by your emotions by following market panic or excitement.

In fact, selling when a stock is falling or buying when it is rising gives is an illogical method. When a stock price falls, it is cheaper, so you should buy more, when it rises, it is more expensive, so you should buy less. If a stock has very rapid falls (10% or more in a day) then count that as a very risk adverse investment.

Invest Regularly

An alternative to buy low sell high is to use a strategy called ''Pound Cost Averaging''. This is where you pay in a set amount into an investment fund every month. Funds generally spread the investments around, and are normally run by professional managers who make stock selections so you don''t have to.

If you use pound cost averaging, it''s true that you''ll often buy stocks when they''re expensive, as well as when they''re cheaper, but this will be averaged out so you will effectively buying the same amount for the same rising price over the long term. It''s an excellent and stress free way to build your fund. Lecia Selbo opened a stocks and shares ISA with Legal