How To Invest In The Stock Market

Let's say you have suddenly acquired an unanticipated $1000. It's extra money, meaning money you don't need to live on. You don't want to dribble it away on things you don't really need. What you'd like to do with it is see if you can make it grow. Your options are relatively few. You can put it in savings, where you don't need to think about it after you've deposited it (except for taxes), or you can venture into the unknown world of stock market investing, where you'll find yourself staying awake nights pondering the wisdom of what you've done (or not done).

Here's the kicker. If you choose the stock market as your investment arena and you make reasonably smart moves, you'll probably find a greater profitability in your investment there vs. the income you would have accrued putting that thou in some other, safer type of official market. Less risk, less profit, pilgrim.

Okay, you're going for that first stock market investment. First thing you need is a way of purchasing stocks. As an individual, you can save yourself some money by going online and buying through an online broker. Your purchase goes through instantly and your broker fees are less than if you'd walked into a downtown broker's office.

Before you do that, though, why not take the time to research the companies whose stock you're interested in? Perhaps you don't have a certain company in mind, but rather a type of business, say, shipping and freight companies. These days it's simple to check up on investment options with the tools online brokerages and other investment-related sites offer. In many cases it won't cost you more than a little time to familiarize yourself with a stock's history, trend, and other pertinent data.

There are four major ways to invest: Through a 401k plan or, if you work for a non-profit, a 403b plan; through an IRA account; through a brokerage account; or through a direct stock-purchase plan or dividend reinvestment plan (DRIP).

The more varied your investments, the less chance you'll be seriously hurt if one of them sours. Invest in a range of different companies from blue chips to technological starts.The more companies in your portfolio, the better. Pick about five to start with.

Look only at companies that are profitable. Ultimately, the stock price is a reflection of how a company is performing.