Getting into the world of trading can seem daunting. Here are the key things to consider if you’re just starting out.
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00:00Before investing in stocks, it's important to do your homework.
00:07Here are some key things to consider if you're just starting out.
00:11Your investment strategy depends on what exactly you're investing for.
00:15Be prepared to know your investment goals when opening a brokerage account.
00:19These could be saving for retirement, buying a house, or even college tuition.
00:23Your goals can change over time, and you'll need access to some investments sooner than
00:28others.
00:29Ask yourself, how much of your investment can you afford to lose?
00:33Since some stocks are riskier than others, you should focus on stocks that match your
00:37personal risk tolerance.
00:38If you're living paycheck to paycheck and you need money for next month's rent, you
00:42have a low risk tolerance.
00:45That means you should choose investments that are more conservative and risk-averse, such
00:49as a high-interest savings account.
00:51In the beginning, your portfolio might look like more bonds and fewer stocks, but as you
00:56become more financially stable, that ratio might flip-flop.
01:00Just because you want to start trading stocks doesn't mean you need to be an expert.
01:04Some prefer to take a more active approach in managing their investments, but there's
01:08also nothing wrong with leaving it to the pros or putting it on autopilot.
01:12Either way, it's a good idea to practice first with a stock market simulator, which can boost
01:18your trading know-how without risking your money.
01:21Finally, since trading is inherently risky, you'll want to mitigate that by spreading
01:25out your investments across a wide variety of assets.
01:29In other words, don't put all your eggs in one basket.
01:32And if your starting budget is limited, consider mutual funds and exchange-traded funds, which
01:37tend to own a large number of stocks, aka more diversified than a single stock.