The top five steps to stock market success
Published in the Think and Grow Rich Magazine - September 2011
By Dale Gillham
Entering the stock market can be overwhelming at the best of times, but with the events of the past few years many people have completely stopped investing, writes Wealth Within chief analyst Dale Gillham.
Now is the time to re-enter the share market and there are a simple set of guidelines to live by that will help you reduce risk and ensure you have a high probability of success.
There is no substitute for a proper education in the share market to increase your success rate, but if you don't have that behind you I recommend five key things to consider.
Quality over quantity
The first key when investing your hard earned cash is to ensure you buy quality shares. It doesn't matter whether you own one share or a thousand shares; it is the quality of the share you own that counts. If you make 10% on 1,000 shares in a small company or 10% on 100 shares in a larger company you have still made 10%. The probability of making money is much higher on quality shares because they are more liquid and better managed, therefore investors have more certainty.
Set limits
To make the market seem less daunting, ensure you have an exit point or a way out when you need it. People only worry about a share they own when it is going down, therefore setting yourself limits can be a key factor in making you more relaxed with your money - and enables you greater control of your money.
Don't speculate
There are only two things anyone can control when investing: when you get in and when you get out. Once your money is in the market, the market is in control.
As such, I suggest you wait until it does something before you can make a decision rather than speculate on what it might do.
Say no to software
I believe that one of the mistakes people tend to make when they begin investing in the market is to purchase computer software with the belief that it will help them with their market choices. On the surface this may look great; however many spend their hard earned cash on expensive software packages that promise riches from very little effort or capital, only to find out that it is a far from realistic scenario.
Use caution with marketing companies
A lot of share market education is promoted by companies that are more involved in marketing than quality market educators. Their tendency is to often paint an overly positive view of trading, showing investors how much money they can make but never really showing them how much they can lose. My advice is to do your research and make sure you can qualify and quantify everything they say.
