Things to understand before buying shares for the first time
Buying shares for the first time is a memorable moment for many investors. There's a sense of pride in being part of a company
Buying shares for the first time is a memorable moment for many investors. There's a sense of pride in being part of a company, even if it's just a children's toy manufacturer.
This feeling is perfectly natural, especially for those just starting out and facing financial risks.
Many novice investors make various common mistakes when they start investing in stock because they don,t understand the risks from the start.
Shares aren't just numbers.
Shares are legal proof of our ownership of a company. They aren't just numbers that move up and down on a screen.
When we buy shares, we actually become part of that company's business journey. For this reason, the rise and fall of share prices is a part of the company's business journey.
These fluctuations can be influenced by many factors, from economic conditions, company performance, to market sentiment.
Therefore, we must understand the market situation from the outset, as this will help us remain calmer in the face of fluctuations.
Without a sense of calm, losses will inevitably follow. This is something many of my friends have experienced when opening their first stock trading positions.
Using investment funds appropriately
The next important thing is understanding the risks. Investing in shares has the potential for profit, but simultaneously carries the risk of loss.
Therefore, it is highly recommended to use funds specifically allocated for investment, not your daily needs or emergency funds. This way, you can minimize emotional stress when stock prices drop.
Beginners also need to understand transaction costs. Every purchase and sale of shares is usually subject to a fee from the securities company.
These fees may seem small, but if you make frequent transactions, the total can be quite significant and impact your investment results.
The Importance of a Simple Plan
Furthermore, it's important to have a simple plan before buying your first share. This plan doesn't have to be complicated; it simply includes the reasons for buying the shares, your target timeframe, and your risk tolerance.
With this plan, we as investors have a handle on how to navigate uncertain market conditions.
Finally, don't hesitate to learn gradually. The world of stock investing is vast and impossible to grasp in a short time.
Reading, discussing, and evaluating your own experiences are all part of the learning process that will shape you into a more mature investor.
With adequate preparation, buying your first share is no longer a daunting step, but rather the beginning of a more focused and meaningful investment journey.
Once we have a basic understanding the mental readiness of novice investors also greatly determines long term success.
Preparing this mentality requires a process of repeated habits. I've covered this topic in my previous article on how to build healthy stock investment habits from the start. Let's take a look at how to become a resilient stock investor.
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ECONOMIC AND BUSINESS