When it comes to investing in the stock market, many people admit they have a desire to but that their uncertainty of how it works and when to invest in the stock market makes them cautious about doing so.
However, for most people, the only way to secure their retirement is to save money in a high-interest bearing account that also enables you to benefit from capital gains, allowing your initial investment to grow bigger and faster over traditional savings accounts, which investing in the stock market enables you to do.
So now that you know the main benefits of investing in the stock market, let’s take a look at some ways to help combat your fear of it, so you don’t put off its benefits any longer because time is of the essence.
How to Get Over Your Stock Market Fear
The more you understand something, the more you are able to freely participate in it because you have dispelled the unknown.
Therefore, the first step to getting over your fear of the stock market is to research the subject, including listening to experts, to familiarize yourself with the different investment options and how they work, which will help prepare you for choosing the best ones for you. Becoming knowledgeable in your investments means that you are able to take calculated risks, but experience also counts for a lot. The more trial and error, the more you know what not to do too.
Start With the Minimal Investment Amount
Starting small means the less you have to lose, so are free to play around with the market and learn your risk level, which will help build your confidence to gradually invest more. You will also want to give yourself some time to save up for it, so that you’re not spending what you cannot afford. A great piece of advice to live by is to not invest more than you cannot afford to lose.
There are even micro-investing services online that enable you to automatically invest your spare change to get started.
Be in it for the Long Haul
Stocks take a while to mature; hence, investing in them should be for the long term. Therefore, once you have made your stock purchases, resist the urge to anticipate impressive returns for at least a year. Another thing to think about when holding onto your investments for a long time is that long-term investments almost always outperform the market when you try as hard as possible to time your investments. If you are trading based on emotions, then you are less likely to get the return you are hoping for.
In fact, it takes the average portfolio up to 10 years to generate a 9% return, so don’t be afraid to just sit back and allow your investments to grow and reach their potential. If you want to go even further than this and hold onto your stocks for longer, just know that over most 20-year investment periods, investors receive positive returns. The best advice here is to ride out temporary downswings in the market – this is one of the characteristics often associated with a ‘good investor’.
Accept that Stock Prices Will Fluctuate Along the Way
Various everyday factors affect the market; therefore, it is natural for it to experience temporary dips in stock prices. However, investing for the long haul gives stock prices time to recover before you need the funds, so you’re not actually losing money.
It also provides a great time to stockpile more stock at a cheaper price so that when the market does bounce back, your portfolio will be worth even more. You can become a day trader, but for most people it isn’t the kind of investing that’s going to sustain them – financially and emotionally – for a long time.
Understand When to Buy and Sell Stocks
To profit from stock, you need to buy low and then sell high.
Therefore, according to the experts at SoFi, when buying and selling stocks with SoFi, “an investor can set a price range for when they want to buy a stock, and they can also set a price range for when they want to sell to help determine when they should sell.”
However, they stress when purchasing undervalued stock, you still want to hold onto it for a while because it can take a few years to reach its correct value.
Hopefully, this has left you with the confidence you need to take the first steps towards investing for a brighter future.