Create your own index
fund. Choose an index you would like to track, like the NASDAQ or Dow Jones.
Buy the individual stocks that are on that index on your own, and you can get
the dividends and results of an index mutual fund without paying someone else
to manage it. Just be sure to keep your stock list up to date to match the
index you track.
Don't get discouraged
if you make a bad trade. Everyone makes bad trades every once in a while.
Instead of being upset or discouraged, take the opportunity to learn from your
mistake. Why was it a bad trade? How can you learn to spot a similar bad trade
in the future? Use it as a learning experience.
Make sure that your
investments regularly have the opportunity to grow by setting up an automatic
payment from your daily account to your investment account. Set up an automatic
transfer to occur on payday so that you are effectively paying yourself like
any other bill. And then watch your investments monies grow.
Be prepared to keep
the stocks' long term. If you only intend to hold on to the stocks for a short
amount of time, be prepared for a lot of volatility. The market is extremely
difficult to predict in the short term, and you may end up selling the stocks at
the wrong time. Holding on to them for the long-term is the best way to ensure
a profit.
It is important to
understand what a PE ratio is when investing in common stocks. PE ratio is
short for price to earnings ratio and is a reflection of what the price of
stock is compared to how much money it earns. Using the PE ratio when valuing
stocks helps to judge whether the stock is a bargain compared to the money it
generates, or whether it is selling at a premium. It is not the only thing to
consider, of course, but it one basic indicator of a stock's relative worth.
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