Different tips for amateurs to earn money fastly in the stock market game by
avoiding certain risks.
Best way to earn in the stock market is trading after doing a proper analysis of stocks. Basically,
there are two types of personalities who play the stock market. One type includes people like
Warren Buffett who does fundamental investing. Other types are speculators like famous
The main difference between fundamental investor and speculator is how they see ‘stock price’.
Fundamental investor gives less importance to stock price than speculators. For speculators,
the stock price is everything about investing in stocks.
Some tips for beginners to earn faster are as follows:
1. Be fully aware of the game you're playing in the stock market:
Winning the stock market game is possible but not how most investors go about it. Some
investors realise returns far below the general market. Data for the ten years through 2013 show
that the average investor earned an annual return of just 2.6% compared to a return of 7.4% for
stocks and 4.6% for bonds.
2. Professional's stock market game: The professionals’ stock market game is about taking risks
to beat your comparison index since they are measured against the rest of the managers in their
investing style. Data from 2012 mutual fund performance shows that just 39% of professional
fund managers beat their index while the average fund return actually trailed the stock market
(S&P 500) by a per cent after fees. Anyone can make money when stocks are rising. It’s the
crash-proof portfolio that will keep you from losing your hard-earned returns.
3. Be a winner through diversification:
The most important amateur’s trick to winning the stock market game is diversification. To have
a mix of investments that react differently to the economy and the stock market. Bonds and
stocks rise and fall differently because bonds are a contract for fixed payments while stocks are
only an ownership stake in potential profits. Diversifying your investments means investing in
more than just stocks and bonds. No other investment has created as much family wealth as
real estate and the property is great for protecting your portfolio. No matter what the economy
does, your investments will make a smooth path higher.
4. Keep minimum investing fees:
Mutual funds charge an average of 1.4% a year to pay their managers and overhead cost.
Fidelity reports the average investor on its investment platform makes 77 trades a year. That
could cost you upwards of $770 a year in fees even on the cheapest discount brokers. Don't sell
your stocks rather invest in companies with products that people love and that will be around
forever, and then hold the investment until you need the money in retirement. You’ll save on
fees and will avoid a lot of the bad investing habits that lose money.
5. Amateurs to avoid using margins:
Margin is basically a loan your broker gives you to buy more stocks than you can afford. You’ll
pay interest on the borrowed money but can increase your return as long as your investments
Lose 10% on your $5,000 portfolio and you are only down $500. Lose 10% on that same
portfolio margined to $10,000 and you’ll lose more than $1,000 with interest. Investing on
margin can be extremely tempting and one of the fastest ways to lose your money.