If you are reading this with the intention of investing in the stock market you are probably very keen to get started and start buying bonds and trading penny stocks because you have heard people say that you can make a lot of money from them.
I urge you to wait though before dipping your feet into the murky waters of stock exchange trading. If you have been told that you can make millions overnight you might, but it is far more likely that you would lose money if you just plunged in and started online stock market trading without an investment strategy.
You may already have a savings account with your bank. That is the lowest level of risk that there can be. If you simply put your money under the bed for a rainy day I guarantee that you will lose the spending value of that money because of the effect of inflation.
In a bank savings account you are investing money with that institution and the contract to pay you a certain amount of interest. Currently that amount is very low but it is a safe investment, normally protected by the government.
When you feel comfortable with that move on to invest in the money markets. They are different from the savings account in that you will have to contract to keep your money invested with them for a short while. One year or thirteen months is normally the maximum period. For this commitment they will offer you a higher rate of interest.
The next level are Certificates of Deposit. For these you will be asked to invest your capital for a longer length of time. The more capital you in invest, the higher the interest rate they will offer you. This same principle applies the longer you start the investment off for.
Whilst you are making these investments you will be gradually building up your capital. At the same time, we recommend that you do a lot of studying. Get a hold of some stock market courses and read all that you can about the different aspects of real trading on the stock markets.
So many people have been unnecessarily put off by the fact that they made a loss in their first trading effort. The reason was probably that they did not know what they were doing. Noone would start to drive a car without having some lessons. Why do we feel that the stock market is different?
Start slowly and you will win the race.
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