Whether you grew up during the latest recession or are simply wary of the stock market at large, you have every right to be skeptical toward the idea of hitting it big via trading and investing.
That being said, the younger crowd should use that skepticism to their advantage when it comes to getting started with stocks.
Think about it. Rather than fly blindly or try to navigate the marketers without doing their homework, millennials are less likely to throw caution to the wind. Similarly, young people are natural penny-pinchers and understand the perils of dumping everything they have into stocks.
If you’re looking to get started with the stock market as a millennial, keep the following six tips in your back pocket to give yourself an edge.
Pay Attention to Ratings Yourself
Although this might seem like a no brainer, pay close attention to stock ratings and scores firsthand. In short, don’t make any assumptions or let someone else’s “guru” advice online determine your portfolio in and of itself.
The more you know about investment trends in real-time, the better. Taking any sort of investment advice with a grain of salt is naturally a good idea, but paying attention to data and trends as they occur can clue you in on what’s really going on with your trades.
Don’t Obsess Over Tech Stocks…
It’s only natural to get excited over the hustle-and-bustle nature of tech startups; however, don’t assume that the newest, sexiest tech companies are going to result in the best stock opportunities. This doesn’t necessarily mean that you should ignore tech stocks, but don’t exclude other stock opportunities because they’re seemingly “boring” or “safe.”
Everyone wants to be on the ground floor of the next stellar startup, but don’t assume that you’ve struck gold before knowing the risk involved.
…Or Household Names
On a similar note, it’s not always the best idea to start with household names when it comes to investing. Stocks such as Apple, for example, are through the roof compared to smaller name with a larger upside. Therefore, household names likely aren’t going to become staples of your portfolio.
Sometimes it pays to put your trust into smaller stocks for the sake of risk and scoring that ever-so-sweet ROI. Remember: the stock market represents a marathon and not a sprint. Those stories you hear about that twenty-something that made millions in stocks overnight may seem enticing, but get-rich-quick stories are one-in-a-million.
Never Stop Saving
It’s a good move to beef up your savings account even if you’re scrambling for new opportunities to invest. Whether you decide to invest in a Roth IRA or contribute to a company 401k, extra money in the bank outside of your portfolio is a major plus.
Reinvest Whenever Possible
On a related note, reinvesting your capital whenever you score from your stocks is a savvy move to ensure that you never put yourself in the red. Think about it like this: reinvesting your returns never truly results in a loss and is ideal versus needlessly dipping into your savings account to keep your momentum moving.
Look Toward the Long-Term
Don’t doom yourself into being a statistic. Young people are often regarded as being short-sighted and making rash decisions, but remember that stock traders are always playing the long game. While you may not make it big in a year or two, you may be shocked at how what your portfolio looks like in five years time when you’re consistent.
Who ever said that the stock market was no place for millennials? As long as you tread lightly and take your common sense along for the ride, navigating the stock market doesn’t have to be so daunting for young, new investors.