Stocks are one of the most popular places to invest in the hopes of making money. Investing can be risky, but not all investors lose everything. Some investors start small and lose what they can, but are ultimately successful. In the end, the stock market is a gamble, but it is well worth investing even if you are only investing small amounts at a time to help build your portfolio while having no impact on your family’s finances. You could end up reaping big returns on your small investments after a few years. With a little planning, you can make money with stocks.
Never invest more than you can lose
As much as we all know that you cannot make money without spending money, you should never invest more than you can lose in stocks. As a result, stock markets resemble gambling, and you do not want to gamble with the money you need for survival.
Your bonuses at work or a side job might bring you extra money. A smart move would be to split this money between savings and hills and valleys, which can be used to cover imminent needs or emergencies. By investing a portion of your income in one form or another, such as stocks or cryptocurrency, you will be putting your money to work more than it would if it was simply parked in a savings account.
Invested funds take a few days before you can withdraw your money, so having your basic savings and a little hills and valleys account is as important as investing for long-term gains.
Diversify to make money with stocks
It is not a good idea to put all of your eggs in one basket when you’re playing the stock market smartly. In the event that one area of the stock market crashes at any time, diversifying your portfolio can help you focus. It is not uncommon to see seasonal highs and lows in different sections of the market.
There is a risk that a particular market or company may collapse, so it does not make sense to invest all of your money in one area or company. There is a tendency to see major dips in the economy in areas such as manufacturing, travel, and technology. Don’t panic if this happens since the market will almost always climb back up.
Look for dividends
If you are looking for stocks to invest in, you should look for dividend-paying stocks. This is a simple way to make money from your stocks without having to do anything like watching carefully for the right time to sell. The best way to make money from stocks is to hold them long-term so the stock can grow in value over years. When you chose stocks that pay dividends you make money off the stocks simply from holding them allowing you to make money with your stocks rather passively.
When your stocks payout in dividends you can reinvest these into your stocks to help grow your portfolio allowing you to make more money over time. Eventually, you will have built up your portfolio enough to use your dividends as part of your regular income if you have invested enough into dividend-yielding stocks.
One of my best performing dividend stocks is actually my power company so once a quarter or so my power company pays me… That’s pretty nice considering how much we pay them.
Invest profits back in
When you make a profit on stock sales or dividends, you should reinvest it back in instead of withdrawing it and spending it unless absolutely necessary. Investing this money back in allows you to grow your portfolio and make more money in the long run without having to invest more money into your stocks. Making more money with this strategy is a great way to continue to expand your earning potential.
Buy during a downturn
Stock markets have been experiencing massive downturns during the past couple of years. Many people with extra money or confidence that they could toss their savings into the stock market did exactly that when the market bottomed out, and the results have been beyond incredible.
Investing when the stock market is stable can provide you with a smaller return than when it dips during a major downturn. Watch for major dips in stock markets and jump on them with some of your saved money. A general rule to follow should always be to never invest more than you can afford to lose.
Jump in when new stocks hit the market
Investing in stocks when they are first available for public sale is something many people regret. Businesses can be a bit of a gamble because you never know which ones will succeed and which ones will fail.
Stocks of products you use yourself or have faith in are a great investment during the introductory period. The lowest they will likely ever be is the best time to buy these stocks. This puts you in a position to make large profits over the coming years. This is another case where the general rule of never investing more than you can afford to lose applies.
Sell during peaks
When a stock in your portfolio peaks out you can sell for a profit or continue to hold. To make money from your stocks you can sell them when they are high and turn around and invest back in after they drop again or you can opt to only sell your profit margin leaving your original investment in the stock to continue to ride the normal rise and fall of the stock market.
Take advantage of free stock to make money from stocks easily
We use Stash to build our stock portfolio a little bit at a time. One way we make a good chunk of cash with Stash is getting the free stocks they offer both when you sign up and during Stock Parties a couple of times a week. This free stock may not be much but it adds up and I often chose to sell ones that do not offer dividends to reinvest in stocks that do. Join stash today for $20 in free stock to get you started.