The newbie’s guide to online investing

Saving money alone won’t make you rich anytime soon. You need to make your money work for you and aim for a multiplication factor much superior to the interest rate offered to you by your bank. There are numerous ways to make more than 1% a year and building a share portfolio is one of them. The good news is that you don’t even need to leave the comfort of your home. The bad news is that you have to do some research and also invest in your financial education. Here are a few simple steps to get you started.

1.      Educate yourself

When money is involved, it’s better to understand at least the basics. Even if you choose to work with a broker or do all the trading through an online platform, it pays off to have an understanding of risk and profit categories associated with each type of investment. You don’t need a master’s degree in finance but telling apart stocks from forex or binary it’s a must. Get acquainted with simple terminology as bid/ask, as well as short/long positions. Even on a DIY platform for beginners, you are still going to run into these concepts.

2.      Design your strategy

Trading involves both time and money and doing it right requires a considerable amount of planning. Try to be realistic about your resources and the degree of involvement you want to have. If you are looking for a way to save for retirement without much hassle, don’t choose individual stocks. Instead, go for an AI-powered platform. If you enjoy the thrill of looking at the ups and downs of the market, you can go deeper into the study of profitable stocks.

Once you know what you are in for, try to learn about stocks. Some are good for fast trading, while others will get to their full potential in a few years. Of course, it’s a gamble, but having some knowledge about a specific industry could help. Never put on the line more than 5% of your capital on a single trade, ideally around 1%.

Think about ways to diversify your portfolio and to limit your damage. Never go for the hear instinct and buy what is hot in the news. Once it hits the screen, it’s already yesterday’s news. You need to look for the underdogs and be ahead of the trend.

3.      Choose the right tools

Most likely you won’t be able to afford a personal broker if you are just starting out as an investor, so an online platform is a better choice. There are numerous options, with different commissions, perks and even learning platforms. Scan through them before making a decision. We’ve also found this excellent review for beginners which lists the most popular online brokers.

Don’t just go for the lowest commission, take into consideration the ease of use and the support they offer you. Aim for a 24/7 service.

Before putting in your first deposit make a promise to yourself to stick to your trading strategy and don’t give in to the most dangerous traps: the fear of missing out when buying and panic selling.

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