Is investing in the stock market easy? That’s a question many debate. Some equate investing in stocks the same as gambling and others say it’s impossible to do. Regardless of your walk of life or comfort level with the stock market I believe investing in the stock market can be relatively easy to manage. It all depends on your mindset.
When you invest in the stock market, so much of it comes down to knowledge. As the saying goes, with knowledge comes power and that could not be more true than in relation to investing in the stock market. The great thing is that there is a wealth of information available and most of it is free or very cheap. The key to getting that knowledge is finding what works for you and running with it.
Now that you’ve armed yourself with some knowledge and feel comfortable with the next steps you want to determine what your risk profile or, better yet, your risk tolerance is. Essentially, you need to determine what will help you sleep at night. This is different for everyone and there are free investment tools to help you determine this.
If you’re unsure about what your risk tolerance might be then a great place to start is to determine what your investing goals are. That can help you narrow down what time frame you’re looking at and help you look at what type of asset allocation you’ll want to have. For example, if you’re five years from retirement then you may find that you do not want to be concentrated heavily in growth stocks, but looking at a more diverse mix of dividend paying stocks along with some more conservative investments.
by John Schmoll in Investing March 2016