| There's something about making money in the stock | | | | it's a small amount, you're more likely to regard it as |
| market that makes it very alluring. For some people, | | | | a learning experience instead of a crushing blow. |
| it's the prospect of being able to work from home. | | | | What's your investment horizon? Are you going to |
| For others, it's the possibility of making great | | | | be investing for the long term (buy and hold |
| amounts of money in a relatively short amount of | | | | strategy, a la Warren Buffet)? Are you going to |
| time. There's yet another group that sees it as the | | | | trade stocks on a short term basis for profit? |
| perfect way to diversify their income and reach | | | | Depending on which you choose, you're going to |
| retirement with a sizable nest egg. Those scenarios | | | | adopt different techniques in order to be successful. |
| illustrate the fact that everyone has different | | | | What matters for a short term trader might be |
| motivations for investing in the stock market. | | | | completely irrelevant to a long-term investor. |
| Even motivations vary, the principles to make money | | | | What's your risk tolerance? If you've answered the |
| in the stock market don't vary so much. Of course, a | | | | previous two questions, you probably already know |
| short term trader follows different techniques | | | | the answer to that question. It's good to keep in |
| compared to a long term investor, but the successful | | | | mind that there's a trade-off between risk and |
| ones in both categories know that it's all about | | | | reward. In other words, the higher the reward, the |
| setting up a winning strategy and following it to the | | | | higher the risk you have to be willing to stomach. |
| letter. That means being disciplined, pro-active, and | | | | People with high risk tolerance might go for day |
| avoiding greed. | | | | trading, penny stocks, and comparable short-term |
| The beginner investor might ask: what do I have to | | | | investment vehicles such as options. People with low |
| know to get started? Well here's what you need to | | | | risk tolerance might be better off going with index |
| figure out. | | | | funds, blue chip stocks, and bonds. |
| How much money are you going to invest? Do you | | | | All in all, it really is a personal decision as to whether |
| have a lump sum to invest all at one? Or are you | | | | or not to invest in the stock market and what type |
| planning on investing a set amount of money on a | | | | of investment to put your money in. With some |
| regular basis? Or are you just going to invest every | | | | patience and the willingness to learn, and the |
| time you have spare capital to do so? It's generally | | | | understanding that there is a risk of losing some |
| recommended not to invest too large an amount of | | | | money, everyone can play the stock market game |
| money right away. Instead, ease into it. If you | | | | and win. |
| happen to lose money, it won't be a big deal. And if | | | | |