Two Ways to Invest in Stocks

Two Ways to Invest in Stocks

All of us should prepare for the time when we are no longer young and strong. God forbid that we become sickly but we must prepare for that as early as now.  We need to find ways to save and invest to have a comfortable life when we grow old.

There are lots of ways and strategies we can think of to plan ahead.  And one means of ensuring a better future and of saving for emergencies, rainy days or old age is by investing in stocks. It’s risky but it’s worth the try.


So how do we invest in stocks? Well, there are two schemes to choose from. Here they are:


1. Passive trading or Cost Averaging

There are two strategies to choose from when we invest through passive income. One is finding a reliable broker. But here,  you get the chance to personally choose the company or companies you want to invest in. Two is through mutual funds where your broker is the one choosing the company or companies to invest in. This scheme allows your broker to fully and professionally manage your stocks, deciding for you when to sell or buy shares.

Passive income enables you to have additional source of income without doing a thing except invest money as shareholders.

2. Active Trading

This strategy requires you to well, get active, and look after your stocks by monitoring the ups and downs of the stock market. It gives you the exciting opportunity to choose your own stocks. Then it also enables you to analyze the performance of companies and determine which one to retain and which one to sell.

Active trading is pretty risky but it will inculcate discipline, alertness and perseverance in the stock investors.

Active traders must learn to analyze and predict the economic situation, thus the need to know when to pull out or sell stocks, and when to buy many stocks.

Whether you choose active or passive trading when you invest in stocks, the important points that investors should keep in mind are the following:


1. Determine what kind of trading best suits you.

If you don’t like having all the responsibilities of investors who pursue active trading, then choose cost averaging or passive trading. Enjoy the option to either manage your own stocks by choosing the companies to invest in, or allow professionals to manage the stocks for you.

On the other hand, choose active trading if you’re excited to study the stock market performance and chart analysis, and if you want to buy and sell stocks yourself.

2. Add money to your stock account in regular intervals.

You can do this monthly, quarterly, semi-annually, or yearly. It depends on the availability of your funds. Better set aside certain amount of money from time to time to ensure regular flow of funds to your stock account.

3. Observe the performance of companies or analyze which companies have established stability and growth through the years.

Make sure you invest in the best companies to avoid frequent money losses when you invest in stocks. Don’t be tempted to invest in those corporations that are not that reliable that they earn big money yet lose big time too.

4. Don’t be afraid when your stocks turn red.

The stock market is just like that. It often turns red. Buy stocks during this time because it means the prices of stocks are low. Remind yourself of this instead of getting scared that you’re incurring losses. You’ll certainly gain money when your stocks finally turn green, but got to buy stocks in low prices when the stocks turned red first.

5. Avoid withdrawing your money.

The money in your stock account should be reserved for the future. It’s your investment when you reach senility. So refrain from getting your money. Placing it in the stock market for many years will provide you huge dividends and interests.

It’s really a risk to invest in the stock market due to its fluctuations and unsteady flow. But still, a lot of people still decide to invest because their money grows more as compared to putting all your cash in the bank. It’s still advisable to put some of your money in the stock market.

Aside from the investment, you learn to discipline yourself. Aside from this, you also become conscious of your country’s economy. Well, don’t you know you’re helping your country by investing in stocks? So include stock investments on your future plans. Your country will benefit from it too.