new investors

A Primer for the New Investor

If you’re now at the point where you want to plan for your future income goals, then it’s important to set into place some budgetary habits that will definitively lead you to where you want to go. Therefore, there are a number of fiscal practices you’ll want to get into the habit of before you make the foray into investing in the stock market.

Probably the most essential part of planning for you financial picture is to get rid of your current debt. Of course the way you do this depends on the amount you now owe. Don’t lament over how you got yourself in such a bind. Instead concentrate on eradicating these obligations from your life.

If you have substantial credit card debt, you may want to consider obtaining a debt consolidation loan. Although the interest can be high, you can reduce your overall debt significantly by making one payment that is lower overall for the month. Most consolidation loans can slice what you owe about sixty percent.

Next, make it a practice, after you’re paid, to pay yourself first with respect to savings. Make sure you allocate enough for your regular savings needs as well as put some aside for emergency situations. That way, if forced into a circumstance that needs your immediate financial attention, you won’t have to resort to a radical measure such as trying to secure a personal loan.

If you do decide to use credit cards in the future, try to keep your spending within 25% of the limits set on the card. Make sure you make your monthly payments. Don’t taint your credit score by forgetting or neglecting to make a payment or two. Get in the habit of routinely paying your bills.

Developing good monetary habits can assist you in making the right investing decisions too. Acquiring some basic knowledge of the stock market is a good stepping stone towards this goal.

As a basic overview – the main stock exchanges are the American Stock Exchange (also known as AMEX), NASDAQ, and the New York Stock Exchange (or NYSE). If you place a bid on any of these exchanges, you are placing an offer on the number of shares of stock you want to buy. The amount a seller on an exchange is willing to sell his shares for is called the “ask” price. The difference between these two amounts is referred to as the spread. Therefore, the difference between the bid and “ask” price or spread depends on the number of shares traded. If you invest, you can place your own “ask” or bid price, one of the factors used in measuring the effects of trading on any of the exchanges.

If you wish to buy individual stocks, probably going through a discount broker is your best bet in learning how to trade and keeping your costs low. Otherwise, choosing a mutual fund that is geared for your age and income goals is the easiest way to go.

It all just boils down to disciplining yourself with regards to personal finance. By doing so, you too can find success in investing in the stock market as well.

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