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It is extremly important for first-time investors to know how much money he/she should invest in the stock market. Many first-time investors are only attracted by the huge potential profits made by their friends or those stock gurus who they saw on the newspaper ads and they fail to notice the flip side of it. As a result, they might lose their entire lives' savings in the stock market. Contrary to the popular belief among first-time investors that they should invest all their savings, an investor must look at how much he/she can afford to invest and what are the financial goals. Start Small An investor should start with as little difficulty, risk, and pressure as possible. So if invested in small amount in the beginning, it can save the investor from major losses affecting him/her financially. With a small amount invested, the potential money lost is minimal, but the potential knowledge and experience gained is good. For example, it is important to keep 3-6 months' living expenses in a savings account and not to invest any money that the investor might need in a hurry. Essential Funds Should Not Be Used It is common for first-time investors to invest all the savings they have. However, investors should not invest the money they rely upon to maintain the standard of living. This should lower the pressure on an investor and protect the financial stability. An investor should also determine beforehand how much of the savings should remain in the savings account, and how much should be used for investments. Don't Let Emotions Rule It is also common for first-time investors to get very excited and choose the "hot" stocks in the market. Nonetheless, an investor should be disciplined and not let emotions rule the mind. An investor should be able to think keeping emotions, such as greed, fear, anxiety, and excitement, aside. Research Before Putting In The Money Good investments result from careful research that compares, contrasts, and considers various opportunities and avenues. For many types of investments, an initial investment is required. In these cases, the investor should research it thoroughly to determine whether the investment is sound enough. Be Realistic: There is no full-proof formula for success in the stock market. It only comes with experience. Hence, a first-time investor should be aware that no matter how much prepared in advance, he/she is never experienced enough to be infallible. Many investors take years to learn how to become disciplined enough to invest logically. Seek Help From Expert This is important for first-time investors so that they can be sure that they not investing more than they should to reach the investment goals. The financial advisor might also provide other sound advice like never to borrow money from someone for investing. Embrace and Learn From Failures Significant losses are always associates with investments. However, a first-time investor should not take a failure as a discouragement, but rather as a lesson. This can be considered and analyzed thoroughly for the investor to gain enough knowledge form this experience. Also, an investor must start early and build up a strong portfolio of mixed assets to be successful in getting good returns out of any investment.
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