What You Should Know If You Want to Invest in Stock Market

If you want to invest in stocks and want to profit from the stock investment, here is an interesting quote from J. Paul Getty.

“Buy when everyone else is selling and hold until everyone else is buying. That’s not just a catchy slogan. It’s the very essence of successful investing.”

J. Paul Getty (1892-1976), who made fortunes in American oil, was once the richest man in the world with a net worth of 2 billion USD. Getty’s quote on investment can be used as a mantra by anyone who wants to invest in stocks.

The same thing has also been said in other words by Warren Buffett.

“I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.”

Warren Buffett is probably the greatest investor the world has ever seen. By the time he was 14, he was already earning more than the teacher in his high school. Warren Buffett is one of the most successful investors the world over.

Things to Remember When Investing in Stocks

There is a general misconception among people that you need to have a lot of money if you want to invest in stocks. However, this is a partial truth. While having a lot of money will help you to buy a lot of stocks and profit more, you can start investing in stock even with the little money you have. Now, you might ask what you should do when you have limited funds.

Stock Investment Rule No. 1: Buy IPO Shares

IPO, Initial Public Offering, is the primary share offered by a company when it goes public for the first time. Before IPO, the company is entirely funded by private investors; however, IPO will allow the general public to invest in a company that is making profits. Before the company goes public, it should follow the conditions of the Security Exchange Commission. If the company is not making a profit or has a risky investment, the security exchange commission will not approve IPO. Thus, buying IPO shares has minimum financial risks.

When the company goes public, the first shares are priced very low. That’s because IPO is a way to bring new investors to the company.

Stock Investment Rule No. 2: Buying from the Secondary Market

When the IPO closes, based on the performance of the company, the price of the share goes up or down. Usually, it starts going up (because the company has enough funds to expand). If you missed the IPO, you should try to buy shares when the IPO has closed recently. The share value will be still under your reach.

Conclusion        

I would like to conclude this article with a quote from Paul Samuelson.

“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas."

In case you don’t know Paul Samuelson, he was a Nobel Prize winner American economist. Just like Paul Samuelson said, you need to have patience and watch your investment add up slowly, and not expect the multiplication just like in gambling.

(First published on Forum Coin in author's byline)