Monday, September 19, 2011

An Easier Way to Invest in Stocks - articles - What Is My Computer IP

Copyright ? 2011 Stephen Lau

The nature of the stock market is such that stock prices generally rise during a bull market and fall during a bear market. Financial experts attempt to predict the rise and fall of stock prices. But to predict the stock market accurately is always difficult, if not impossible. But there is an easier way to invest in stocks ? automatic stock investing.

It must be understood that the stock market is in constant motion, corresponding to an ever-changing set of market conditions, such as economic and political factors, business cycles, interest rates, and taxation policies, among others. All these changing variables make it extremely difficult, if not impossible, for any human being to predict the stock market accurately, despite the many so-called financial experts and gurus. Regular stock investing neither guarantees a profit nor protects against loss in a down market. Therefore, investing money in the stock market is not as easy as you may think. That said, there is an easier way to invest in stocks.

The good news is that the unpredictability of the stock market puts you in equal footing with other seasoned investors.That is also one of the advantages of automatic stock investing.

One of the dangerous traps in stock investment is buying high and selling low. That is often due to inexperienced investors who erroneously think that they can outsmart the stock market by ?predicting? or ?timing? the stock market.

To avoid the above investment pitfall, go for automatic stock investing. That is to say, invest each and every month a given dollar amount into your portfolio of securities (stocks, bonds, mutual funds), regardless of the current market conditions. Essentially, you will automatically buy more shares for your money when the share price is low, and fewer shares when the share price is high. Accordingly, the average cost per share will be less than the average market price per share in fluctuating markets, because you accumulate more shares for your money when the market is down. Automatic stock investing is especially ideal for volatile market conditions and long-term stock investment. In addition, it is less stressful and much simpler to be a long-term stock investor than to be an active stock trader.

Historical evidence shows that the stock market has been, over the long haul, one of the strongest places for investing money and making it grow. The downside of automatic stock investing is that you must train yourself to tolerate short-term fluctuations in the stock market in favor of participating in its long-term growth.

If you think automatic stock investing is an easier way to invest in stocks, consider the following:

Automatic stock investing involves continuous stock investment in securities, regardless of fluctuation in price levels. Therefore, you must also consider your financial capability of investing in stocks continuously even during long periods of fluctuating price levels.

Diversify your stock investment and stay invested in all the major asset classes over the long haul. That way, you avoid the mistake of many investors of chasing last year?s winners, which may turn out to be this year?s losers. Consider diversification as the foundation of financial stability in stock investment.

Consider the risk factor in stock investment, or rather in any type of money investment. Risk is a fundamental reality of investing money. Consider the risk and the potential reward. Use your financial judgment to determine the potential to pay dividends, which are proportional shares of corporate profits paid out to shareholders, and capital appreciation, which is the increase in a stock price in relation to the price at which your bought it.

Remember, it does not always take money to make money. But it always takes knowing what to do, how to do it, and where to do it to make money. Automatic stock investing may be an easier way to invest in stocks.

To create wealth, investing in stocks is one of the ways. Learn from the author?s blogs on the Art of Money Investment:
and Investing Money. The author has other websites on money management and money matters.

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