Stock market investments are often labeled as a risky option for investments. Many people especially those belonging the previous generations’ advice youngsters to invest in more stable and reliable investment options. However, the lure of attractive returns can be too tempting to opt for share trading. To add to it, we read, hear and meet people regularly who trade at the stock market and have been consistently making profits. This goes to show that stock trading is maybe not as unpredictable and as risky as it is made out to be. However, the reality lies somewhere in the middle. The risk factor associated with the market is subjective. It depends on the skills and the discipline of the individual traders if they make profits or suffer losses.

Based on historical data, if the investor follows a few basic disciplines and develops a few skills, then stock trading can become a much more reliable and simple option. One of the reasons why there is widespread scepticism about this type of investment is that many people have suffered losses at an early stage and based on their mistakes they have termed the entire concept a risky proposition. Mistakes are common at the stock market investments among arena for a wide range of reasons. Lack of awareness and understanding is one of the biggest reasons that has caused the downfall of many beginners.

Whereas, several beginner investors have faced losses because they had very little experience or guidance in the field. Every new investor, therefore, needs to gain some knowledge and expertise in the field before investing their hard earned money. So if you are thinking of starting your stock trading journey, then there are some things that you should be mindful of. The following are certain things that you should keep in mind when deciding to invest in the stock market –

Choosing a Broker

Picking a broker’s services is perhaps one of the most important decisions that you will have to make when beginning your share trading journey. There are plenty of share brokers in the market, which makes the decision even more difficult. At the same time, the competition among the brokers means that each agency is trying to improve its services to attract more customers. Depending on the stockbroker that choose the fees and the types of investments that you will have access to may vary. Similarly based on the investment instrument access the returns may vary as well.

While picking the broker, you must be wary of those stock broking agencies who try to take advantage of beginner investors by making the process seem more complicated than it is. They try and make the process opaque and try and charge the customer more. You should thus look to hire the services of those brokers who have a good reputation in the market and have been successful over a long period of time. In addition to it, you should also look to get a share broker on board who not only helps you get good returns but also educates you about the various aspects associated with the market. This education will help you in the long run. If you are looking to cut costs, then it may be a good idea to look for brokers who do not charge any commission for exchange-traded funds or mutual funds.

Exchange-Traded Funds to Begin

There is a misconception among many traders in the market that in order to make a lot out of the market, one needs to invest in individual stocks. While this may be true in certain cases. It is not necessarily true in all the cases and particularly among the beginners. To pick individual stocks, one needs greater accuracy in decision making and needs better research and analytical skills too. Thus it is a much better idea to start with mutual funds and exchange-traded funds. There have been millions of people around the world who have made fortunes by investing in exchange-traded funds and mutual funds. In addition to its potential, another advantage that it holds over the others is the fact that they are much easier to grasp than the others. This makes it a good option to start with for the beginners.

Exchange-traded funds and mutual funds provide a new investor with a diverse group of shares even if the investor does not invest a huge sum of money. The money that is sent by the investor gets distributed to buy dozens to hundreds of stocks. This augurs well for the investors as the risk gets distributed too. Hence, it protects the interest of the investors against sudden downturns in the market that could have had a damaging effect on an individual stock. The index ETFs and mutual funds inform you exactly which stocks are owned by you, while also giving the stocks some much-needed exposure. Target-date mutual funds on the other hand automatically adjust the risk levels as you reach closer to achieving your financial goals.

Invest in Safer Stocks at the Beginning

If you want to begin with investing in individual stocks only and do not want to venture into ETFs and mutual funds, then it is a good bet to invest in the traditionally safer stocks. In that case, you must research and invest in those stocks that have historically been less volatile than the market. In such cases, you ensure that the stocks of your choice get adequate exposure to stocks. Consumer staples are widely regarded as a sector that is safer than most of the other sectors. This is because even during economic downturns people still purchase these goods and services. Hence, they are unlikely to be hit by economic emergencies as hard as some of the others. The downside of investing in the traditionally safe stocks is that it will perhaps not earn you as much return as some of the riskier options. Hence, these stocks are suitable for investors who are looking to set their foot in the market and are looking to avoid early setbacks that could discourage them in the future.

Apart from these disciplines, there are other crucial things that a beginner investor must know. Some of these includes not paying too many fees and not falling for the promises of the companies regarding hot stocks. While there are certain things that you should keep in mind when investing in the stock trading market, these are definitely not the only things that you should be careful about. There are many lessons to be learned in the market. For that purpose, it is advisable to gain as much knowledge about the market as possible before starting to invest. Books, research article and online articles can be a great source of knowledge for beginner investors.