Stocks and Shares Investment ==> Invest In Stocks and Shares Beginner

Have you ever considered what your future will be like?

Concerned about how your going to finance that European trip once you leave school, or even buy your first house?

The stock market may not be the safest way to ensure a steady rate of growth combined with a risk free environment but it sure is fun. Think of all of the positive stories that could come out of it.

'Hey mum, I just made a grand while I was at school' or 'hey dad, I'm over this, I'm moving out'. If you've ever wanted to storm through the door and scream this at the top of your lungs then this article is for you.

1) Firstly, there's always the issue of risk in return. The first lesson you have to learn and get into your head is that the more your expecting to make, the more disappointed you'll be when you either don't get to that point, or, you lose the lot. Therefore, the first lesson is set realistic goals. Don't invest $1000 and expect $5000 in a couple of years because odds are it won't happen. When you invest your money, you lose control of it, its up to the business then. That just means you have to investigate before you invest to make sure when your not in charge of the money anymore, the people who are know what they're doing.

2) As a first time, or beginner investor, you won't know what to look for in a management team, and to be honest, at 19 I don't either. That becomes important when your investing huge sums of money but at the moment there's just a few characteristics you want to look for in a stock.

Firstly, if you're investing a significant proportion of your savings you want a steady stock. Try and avoid shares with inconsistent performance and heavy day-to-day movements. Look at price graphs over a period of around a year. The smoother the line the more reliable. These are called 'blue-chip' shares.

Secondly, you need to determine how risky you want to be with your money. This depends on numerous things including the amount your investing, state of the economy and your personality and knowledge. For beginners, you should probably 'jump on the band wagon'. That means that when a share is going up at a steady rate, BUY! For risk takers and more experiences investors, attempt to locate a stock which has experienced a fall in the share price but has maintained a steady valuation, that is, hasn't lost all of it's assets or had an oil field explode. Then, try and pick where you believe the market is at its lowest point and buy there.

If the share doesn't increase in value immediately, don't worry about it. It's only paper wealth; it doesn't affect you unless you decide to sell.

3) Seek advice as a new trader. When I first started, I talked to my grandmother who was an experienced trader. She pointed me in the direction of mining and oil stock at $5.70 back in 2003 and even chipped in some money for me to buy more. Now in 2008, that share is worth $20.25 and is consistently increasing. I've made over $10,000 at a rate of more that 60% a year. That was in a booming mining industry in a booming economy and that expectation would be unrealistic in most financial situations.

From a small sum of money, I made a significant profit but I knew when to get out. As soon as the share hit $20 I sold it and bought shares in several different companies in several different industries. This is called 'diversification'.

Also, brokers can offer advice, these brokers usually cost more money to trade with but it will be worth it when you make a profit as opposed to thinking you can do it all on your own and losing your money.

4) Know when to get out, go in and DIVERSIFY!! Diversification minimises fluctuations in your portfolio worth. For example if one stock falls 10% in a day but another rises 4%, it reduces the damage done. On the other hand, if one goes up 10% and the other goes down 4%, you have diluted your profit. However, diversification is one of the critical aspects of investment in order to gain a consistent growth and avoid fluctuations.

You should also set goals per stock. If a share keeps going up, eventually it will come down; your job is to sell just before it does that. The earlier you sell, the less risky trading is, but if you sell out to early, you'll kick yourself at all the money you missed out on making.

5) This one is for the parents. If you're going to invest for your children or even for yourselves be aware of tax implications. Consult brokers or accountants about this because the last thing you want is a man knocking at your door when your child's moving out only to tell you that he's taking half of the money back. Furthermore, don't invest in risky shares. Choose medium-high priced shares with a solid history and asset foundation because by the time you're ready to cash in, you would have made a profit pretty much indefinitely.

And last thing; don't let it control your life. I went through a stage where I'd check my shares every afternoon and see what the overseas markets did before I went to school. All that does is make you nervous, stresses you out and can force you into making hasty trading decisions.

Final advice: invest long term if you have the time... don't put $5000 into a 5 cent share and hope they go up a couple of cents. Go for a share around $2 to $10 and watch your money grow steadily over time. Research is the key!

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