This is a guest post by Andrew Altman, the editor in chief of SlickBucks.com, a website that helps people learn how they can improve their wealth by investing.
One of the myths of investing in stocks is you need a lot of money to get started.
Most people associate the stock market with men in fancy suits on Wall Street. However, it’s possible to invest in stocks with a small amount of money. Investing as a stay-at-home parent is also possible.
You must be aware of several important things first in order to avoid blowing through thousands of dollars.
Investing well requires learning how to invest and practicing what you’ve learned. You don’t have to practice with real money. Many sites offer demos or virtual trading accounts, so you can practice without spending actual money.
Here are seven tips to help you start successfully trading stocks as a stay-at-home parent.
Learn About Investing
Unless you already know how to trade stocks, you must dedicate time to learning how to invest in stocks.
Stock trading is different from forex trading and other forms of investing. Thus, even if you already know about another form of investing, each type has its nuances.
You must learn specifically about stocks to be successful investing in them. Read books on stock investing, sign up for online courses, or read the online articles on stock trading to educate yourself.
Take Stock Trading as Seriously as a Job
Treat investing like a job. A mistake some people make is treating investing like gambling or a hobby. To be successful at investing you must take it as seriously as a job.
You’ve decided to become a stay-at-home investor to support your family, so it is your job. It takes a high level of self-discipline to make sure you put in the work on schedule. You won’t have a boss watching over your shoulder.
Stay-at-home investors must motivate themselves and keep themselves on track.
Research a Company Before Investing
Research the company and its products and services. You need to understand what the company does in order to make wise investment decisions. It will also let you know whether or not the company is in line with your values.
For example, if you’re against testing products on animals, you won’t want to invest in a company that tests on animals.
Aside from the concern of values and ethics, having an understanding of the company will give you a better idea of whether or not they’re going in the right direction. If they make a decision or product change that customers won’t like, you’ll know to expect the stock price to decline.
Read the Company’s Financial Statements
Read a company’s financial statements before investing in their stock. Important financial statements to look at include the balance sheet, cash flow, and the income statement.
The thought of having to check a company’s financials makes some people nervous, but it’s not as difficult as you might think. Once you know what the terminology is, you’ll read financial statements with ease.
Stay Updated with the News
Keep up with the news, especially that which is relevant to the stocks you’re investing in or considering investing in.
News events and politics influence the stock market. Checking the news every day will give you clues on how a stock’s price will either rise or fall.
If a company has a scandal, then there’s a good chance its stocks will decrease, at least temporarily.
The opposite is also true. Good news like buzz surrounding an upcoming product launch often lead to increases in the company’s stock prices.
One way to stay up-to-date with the news is to set up Google Alerts that are relevant for the stocks you’re investing in. For example, if you’re investing in Nintendo, you could set up Google Alerts for the keywords “Nintendo”, “Pokemon”, and “NTDOY”.
You can also check news aggregation sites for the most important news that affects the stock market.
Save Money to Cover Taxes
Don’t forget the government will take taxes from your investment income. While building your investments over the year, be careful to not spend all of your profit because you have to pay taxes on the earnings.
How much tax is taken depends on which country you live in and what the current tax rate is. There is usually a separate tax form that you must fill out to record earnings from investments.
Look at the Ratings
Check the ratings that others give the company for investing in. Examples of reputable websites that rate publicly traded companies for investment purposes are Moody’s Investing and Motley Fool. It’s helpful to hear a third party’s opinion on whether to sell, buy, or hold a stock.
Remember that these professionals are not always right, so don’t question a decision too much if you’re confident in it. Just take what they recommend into consideration.
Also pay attention to who was correct about the best decision to make on the stock after the price’s change. It will help you increase your accuracy.
True Story of a Successful Stay-at-Home Investor
An example of a parent who became a stay-at-home parent is Jane Gallina. She has reached a six figure income through investing and only works at it a few hours per day. This leaves her time in the afternoon and evening free for her family and other things she likes to do.
However, she points out that it wasn’t smooth sailing in the beginning.
She made a few major mistakes that beginner traders are warned about that caused her to lose $6,000 the first three months.
After recouping and disciplining herself more to stick with the key rules of investment, Gallina started succeeding with investing.
Stock investing is one of the best opportunities for a stay-at-home parent.
Once you overcome the learning curve and practice for a few months, you’ll be able to grow your income through investing. Stock investing only requires a few hours of your day, unlike other stay-at-home jobs.
How much you earn can constantly increase as your trading account grows as well. With other stay-at-home jobs, you don’t have much potential for becoming rich any time soon. Follow the tips listed above and commit yourself to figuring out how investing works to become a successful stay-at-home investor.