What you need to know before investing in the stock market

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Money, Wall Street, investment, these are words that are usually associated with the stock market. Some people believe that investing in the stock market is the key to attaining financial freedom. It’s a long-term financial plan that can earn big dividends if you are smart enough to know the situation. If you want to invest on the stock market, you will need to learn everything there is to know about it. According to investment expert Steve Sorensen, going into the stock market haphazardly is a surefire way of losing all your earnings. Here are some things you need to know before investing in the stock market.

Like most investments, it’s very risky to bank everything you have on one stock. Diversify using multiple options like exchange traded funds or mutual funds. This way, if the stock fails, you will have several other backups and your finances won’t be ruined completely.

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It’s also important not to invest everything all at once. If you are investing on the stock market while still employed, try to invest small amounts every month. This lets you accumulate a well-rounded portfolio and lowers the risk if the market value of your chosen stocks diminish.

If you believe that you have enough resources that you wouldn’t need to pull them out before the stock accumulates value, then go ahead. According to Steve Sorensen, the longer you put money on stocks, the lesser the risks.

Lastly, try to decide how much money you want to invest on stocks on a monthly basis. A good number is usually a person’s age. If you are 25, then invest 25% of your monthly savings on a stock of your choosing.

Steve Sorensen is a Colorado-based Certified Public Accountant, business blogger, and financial advisor. He provides a wide range of advice t0 clients in both the public and private sectors. For more reads on finance, visit this blog.

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