Often Cloudy

If everything else I have done this month wasn’t enough, I took a dip into the stock market this past week to gain some small long-term holdings. A few months ago, I had dreams of running the market and getting some big investments. I was going to time the market (do the impossible) and flip the stocks to make thousands. Luckily, I’m not that impulsive (regardless of how April may appear). Instead of diving in immediately, I prepared myself. This is why I am confident about a new investment.

I read books about investing, trying to find out which was the correct investment for my situation. I learned the differences between mutual funds, stocks, bonds, index funds, etc. I also read up about trading online as opposed to using a broker’s office and the fee’s associated with both.

I practiced. Along with some other friends we set up a paper stock game. We each started with $2000 and chose just 5 stocks to invest in. We then had to hold them for a week and at the end of that time had to option to sell or hold. This went on for a month. At the end the results were tallied up and it was a very humbling experience for everyone. The winner of the contest had only make $77.00 in a month from $2000.00. That’s only a 3.8% return and it also doesn’t factor in broker’s fees, taxes, or time spent doing company research. After all of that, he really only made around $30.00.

I prepared financially. I only put in what I know I can afford to lose. The stock market is not a safe place for savings or any money you might need back immediately. For a safe investment, look to high-yield savings accounts, not the market.

I took a break. Even after the practice game, I had other priorities demanding immediate attention. So I put the thoughts of Wall Street away for a few months. This clear time allowed me to evaluate what kinds of investments are important to me and (for me) the safest way to still get involved.

Only recently did I decide to finally dive in. What pushed me over the edge? I learned about a company I didn’t know existed. After some research I view them as a good long-term investment. Since I am now a player, I’m also starting to look at index funds for additional long-term portfolio weight. I don’t claim to know everything about this, because I certainly do not. This is simply a recount of the steps I took before I decided it was time. I still have much to learn when it comes to the market.

If you are thinking about getting started, just be sure to get all of the information you can first. GetRichSlowly has been running posts about how to get started and become financially literate all month. Its a great resource to find out about the right books to read. An informed decision is the best way to go when it comes to your money. Good Luck.

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