Can you make a living from the stock market? Yes, but only if you take valuable advice from those who have experience in the field. Here are a few tips to consider if you are thinking of investing in the stock market.
Go for Long-Term Investment
Benjamin Graham, known as “the father of value investing,” was famous for advocating buy-and-hold investing.
He believed that you cannot get a solid return on your investment if you pull out of the market after every decline. Apart from the basic belief that financial markets should provide a good rate of return in the long run, passive investment also involves fewer transactions. As a result, you’ll save money on brokerage costs and taxes.
The general opinion has remained unchanged, and investors who are in the know still maintain that the safest way to make money from stocks is to hold onto them for a minimum of five years. How do stocks make money?
Many people who opt for long-term investment might decide to earn their money through regular dividends, while others might aim for long-term capital gains. Although day trading might seem more exciting and some investors make good money from it, it is much riskier, and sadly, most investors incur losses.
If you need more encouragement, billionaire financial expert Warren Buffet has been a major supporter of buy-and-hold investing.
Opt for Dividend Gains
Invest in a company that is either established or profitable or shows sustainable growth potential, and opt for dividend gains rather than capital gains. By doing so, you will be earning a regular, minimum annual income irrespective of the rise and fall of stock over the years, which could potentially add up to thousands or even millions of dollars.
Instead of taking your dividend payouts, you could instead decide to reinvest your dividends and increase your shares. As a result, you would receive higher dividend payments and turn a larger profit if you decide to sell your stocks.
Hire a Coach
There is a lot to be learned from a person who has made mistakes and has been around the block a few times. If you have zero experience in stock trading and you’re not sure how to proceed, it might be a good idea to hire an investment coach who can act as a mentor.
Although hiring a mentor will be an extra expense, it might be well worth it if you consider the costly mistakes you might make without his or her guidance.
Although there is an element of luck involved in making money from stocks, it is comforting to know that it is not only possible to make a living from the stock market but is actually probable if you make sound choices.
As long as you are not blinded by the “make a million in one day” rhetoric and opt for long-term investments in strong, profitable companies, you might earn extra cash.
Do your researches, educate yourself, and consider hiring a coach, and you could soon be a successful investor.