Stock Market Starter Pack – Your Introductory Handbook

Just like riding a bike, trading the stock market takes a considerable amount of practise before it can easily turn into muscle memory. This bundle is aimed at those who are just getting into the markets and would like to brush up on the basics on trading & investing!

Opening a brokerage account can be relatively easy: fill out some paperwork, meet some minimum deposit requirements, and pay some fees. But if you’re investing for the long-term, such as retirement, it might require a little more work.

Basics

The stock market is a major place where people exchange financial assets such as stocks, bonds, mutual funds and so forth. Companies also use this place to raise money for their business, meaning they sell a piece of their company to ordinary people and make them owners by selling their stocks.

Learning to ride the stock market is a daunting task for a beginner and even seasoned investors rely on professionals for advice. There are several steps that you have to take in order to start investing and gain maximum benefits.

Whatever the size or budget of your portfolio, regular savings that are invested in the stock market over the long term will build your wealth. But to achieve success, it’s important first to understand how it works. And that’s just what this course has to offer.

Indexes

Stock market indices can track which parts of the broader equity market are achieving the best results. Often they are constructed in terms of the size or value of a company’s stock (provided by its ‘market capitalisation’). Indexes provide a picture of large swathes of the market that do not require drilling down to look at every individual company within the index – examples include the Dow Jones Industrial Average (‘the Dow’), the Standard ́s Poor’s 500 Index, the Nasdaq Composite Index (they are each a general proxy for the overall stock market, which can now be acquired simply through tracking the price of exchange traded Funds [ETFs]).

And where’s the happy medium? What is the best stock to invest in? Learn the essentials of basic investing – including opening brokerage accounts and understanding associated fees – and then start crafting your lifelong financial roadmaps.

Exchange-Traded Funds (ETFs)

ETFs allow you to get exposure to the ‘market basket’ of stocks in a low-cost way. You can also use them to add diversification to your portfolio.

These funds offer greater liquidity compared with mutual funds since the shares can be bought and sold throughout the trading day, though the ETFs themselves generally track a benchmark (an index) or target asset but also can reflect an actively managed strategy.

In addition to plain-vanilla ETFs of stocks and bonds, there are more exotic fund structures such as leveraged and inverse ETFs that are designed to move in the opposite direction to an index. To better choose your ETFs, look at objectives and strategies, how it tracks the underlying assets, what is a tracking error, should there be any, how liquid it is, limits on how big an issuer of the fund can be, limits on size of your transactions, what is the performance history, and so on.

As your research into how the market works expands, so too will your ability to position your portfolio for success. Effective investing, after all, depends on finding a portfolio that matches your goals, risk tolerance and time horizon long term.

Investment Strategies

The exchange of the shares of investment companies with public access for the purpose of earning profits takes place on the stock market. The stock market can be unpredictable – hence many people forget about its owning and look at the trading charts on their budgets. However, proper training can enable you to gain control of its secret powers and make your investments work toward your investment goals. Learn how to use your own stock simulator and recognise the major parts of corporate financial statements, understand the diversification strategies and you are good to start investing your savings in stock.

Investment can allow you to accumulate your money at an exponential level (if you do it right). To do this, you have to begin early and to have a very long time horizon.

Step one: familiarise yourself with your investor profile and the risks of stocks; using a combination of consulting a trading expert (who can add multiple points of view), scanning the financial press or undertaking a course, this will help you to (a) gain an understanding of the risks involved, as well as (b) what kind of risk you’re prepared to take on. In other words, defining your investor profile helps you to develop your risk appetite, which in turn serves as a base from which to develop your exposure to the market via your portfolio (whether this be units in a fund, or individual stocks).