Buying & Selling Stock
Once you commit to investing in stocks, you have to make the hard decisions of selecting stocks. Your success depends on selecting quality stock. You need a strategy. Regular investments give you the benefits of dollar-cost-averaging. Timing stock purchases and sales will become more important as your stock portfolio grows. You will want to learn about fundamental stock analysis and technical stock analysis.
Dividend Reinvestment Plans (DRPs DRIPs SIPs) are ideal for independent stock investors. You can invest small to large amounts of money when you want. You can achieve financial independence at your own pace and pay little or no commission. You will be financially ready when you need college funds or retirement security. Have a plan, invest at least 10% in your financial future, and act on your plan. You will achieve the financial success you deserve.
- Dollar-Cost-Averaging.
A good basic strategy for success. DRP programs are excellent for small-lot investments; they have the built-in advantage of dollar-cost-averaging. Building a portfolio with regular monthly investments normally results in a lower cost basis than buying the entire portfolio in one transaction. So timing is less important in the early stages of your program.
- Invest in Solid Stocks.
When you select solid stocks and invest regularly, you sleep better and will probably be way ahead of the hot-tip crowd. "If it seems too good to be true, it probably is".
- Fundamental Analysis.
Past performance is one of the best indications of future performance. Consider the basic fundamental factors. In simple terms, look at the earnings history and short-term future projections. Stocks that disappoint Wall Street normally lose support. That means less demand and lower prices. When Wall Street gets burned, they dump the stock quickly and return very slowly.
- Technical Analysis.
Technical analysis offers the best tools for making stock timing decisions. There are several tools that can help you determine the probable future value of the stock. Invest some of your time in learning about basic technical analysis.
Golden Rules
The wealth building strategies of Stock1 are based on the premise that each of us can choose to invest at least a part of what we earn in our future financial independence. Our future financial independence depends on the income of our current career. But we have to work toward its' attainment, we have to learn how to invest wisely. Corporate stock is the most logical place for most of us to invest. Investing in stock does not interfere with our chosen career. Three golden rules of financial success:
- Invest 10%.
You should commit at least 10% of your gross income to investing in your own future. Put this money to work for your future. Don't consume all your income, consumption doesn't work for you. As an investor, you need to build an investment fund that will work for you in the future - or you will always be working for others.
- Have a Plan.
Work out a financial strategy that you believe in. Type it on a small card and carry it with you. You need to understand the underlying reasons for committing your money to specific stocks, at specific times. Then you will have the confidence to follow your plan when the going gets tough. And the going will get tough.
- Act on Your Plan.
Learn as much as you can about DRP investing. Does it make sense to invest in a business you know nothing about? Take responsibility for your own investments. Does it make sense to turn your stock selection decisions over to a stranger (like a stock broker or a mutual fund). You lose control, you simply hope for success... Investing is a serious business. You must be involved.
The fourth critical building block is to learn how to buy and sell stocks. With a working knowledge of stock selection and buy/sell timing, you have the tools you need to act on your financial plan. Knowledge grows with experience! Success will follow.
