2 minutes reading time (385 words)
Investing in stocks by beginners is a major mistake.
Investing always starts small. Just as a long road begins with the first step, so investing begins with the first contribution of a small amount.The main and most common mistake of any novice investor is the accumulation of a decent amount, and only then investing it. This is completely wrong. If you want to become a competent investor, you first need to learn how to invest and get the appropriate experience. And to study better, naturally, on small amounts!
To explain this in more detail - consider the strategy of two beginning investors.
The first investor puts aside 20% from each income received and seeks to save $ 3,000. After collecting the necessary amount, he buys the shares, and the value of the shares falls by 50%, and the investor loses half of his capital. And the investor again accumulates the amount for the purchase of shares. It takes some time. As a result, this investor made only 3 stock purchases. Let's say he stayed in profit.
The second investor takes only $ 100 and also invests in the same shares. After the first failure, he loses just $ 50. Repeats the purchase. This investor will lose some money, but the amount of lost funds will be much less than that of the first investor. Due to the fact that the second investor operates in small amounts, he is able to make transactions of buying and selling shares much more often. He does not need to accumulate initial capital for a long time. And thus, the second investor has much more experience in investing. And after the second investor has gained enough knowledge and experience in the analysis and purchase of shares, he proceeds to invest significant amounts.
Thus, before investing in stocks, you need to get initial experience in analyzing, buying and selling stocks. And it is much more profitable to do this with small amounts. Accumulating significant capital and investing it without proper preparation is the main and most terrible mistake of beginning investors.
To get the initial experience, you can find a broker that allows you to buy even one share of a company! Do not neglect this opportunity to test your knowledge in practice. First, consolidate your experience, and only then proceed with the purchase of shares in significant amounts!