Tips for buying stocks

In the article how to buy shares you will find all the information you need to determine where and how best to buy shares. It is important to choose a good party for stock trading. It is also wise to apply these tips so that you get better results with your investments in shares.

Tip 1: do good research

Many novice investors buy a stock because they know it well. For example, they love the iPhone and therefore buy an Apple share. However, this is not a good investment strategy. It is important to properly investigate how the company is actually doing.

You can do this by diving into the numbers. Companies that are tradable on the stock exchange must always publish all their figures publicly. You can see on the balance sheet how the company is doing financially. You can also use the profit and loss accounts to determine whether the company is still able to periodically make a profit.

It is also smart to research the sector. Check whether the company responds well to the latest market developments. Do you think the sector will continue to have a lot of potential in the future? Then the company can perform better just like that.

Tip 2: choose the right broker

A common mistake made by investors is opening an investment account with their own bank. The product is of course the same in a sense: a share of Apple no matter where you buy it. Still, it is important to choose a good broker. The costs of investing with one broker and with another broker can differ greatly.

A higher expense percentage can significantly affect the long-term profitability of your investment. It is therefore important to carefully research how much you pay for a share transaction with your broker.

It is also smart to pay attention to the preconditions. For example, some brokers may lend your shares to other parties, which in turn entails additional risks. In the article compare brokers you immediately discover which brokers are reliable. That way you can determine with which broker you would like to invest.

Tip 3: spread your investments

The best way to limit your risks is to spread your risks as much as possible. The chance that one stock will perform badly is always present. For example, a company can become involved in a scandal that causes investors to lose confidence. This happened, for example, with BP after a major oil spill.

You can protect yourself against these kinds of crashes by investing in spread. When you buy shares in different regions and sectors, you limit the chance that you will suffer a large loss with your investment. Of course there is still a systemic risk: the corona crisis, for example, is causing almost all stocks to underperform. Yet as an investor you want to protect your investments as much as possible.

Tip 4: be aware of the risks

Investing always involves risks. Shares can drop significantly in value and you can sometimes lose the entire amount invested. It is therefore important to only invest with money that you can afford to lose.

When you invest with money that you really cannot or do not want to miss, there is the risk of taking irrational actions. When the markets crash, for example, you close the position out of a negative emotion and you miss the subsequent revival.