Once you have read a beginners guide, you should really start looking into an intermediate and advanced persons guide. This is because you should not take your money lightly. If you do, then investing is not for you. People will happily throw away $15 on a takeaway, not realizing that they had to spend 1-2 hours at work in order to earn that money. Would you rather have a takeaway or two hours at work? Before you start reading this article, consider how seriously you take your money. Being tight is not being careful and impulse buying means you are easily separated from your money. Here is a guide for beginners who are looking to invest.
Join a bank that has an online investing function
For the sake of this article, we will discuss investing with the HSBC, as they have a suitable online investment function. Sign up for it via your current account and sign up for online banking. Your investment function will be called something such as “Invest Direct.”
Put your seed money into your current account
Your “seed” money is the name for the money you are going to invest. It is called seed money with the idea that it is going to grow as a seed would. You may then log onto your invest direct and have a look around. You will see how there are market tools, a portfolio, a buy and a sell function. It may look a little bit confusing at first, but once you have clicked around and explored a bit, you will see that it is fairly straightforward. Do not worry if you do not understand most of it, as it is only early yet.
You should start with penny shares
Penny shares are actually misleading by name because many penny shares are worth less than a penny. The idea is that you want to start investing, but if you invest in a big company then it is going to cost you a lot of money for one share. It will therefore take a lot longer to grow your money in any significant way.
If you are just starting and only have $200-$300 to spend, then penny shares are for you. They are more likely to go bust, but they are also more likely to move (up or down) in a shorter space of time. Bigger companies will tend to have their peaks and troughs at slower rates, which is not very good for a beginner.
What is so great about penny share?
It is a mathematical thing, with the fact that smaller movements may earn you a bit of quick cash. Here is an example of how the math behind it works.
You buy 20,000 shares at 1c per share. The share price goes up by 0.25 to 1.25c per share, and you times that increase by 20,000, which gets you a profit of around $50. Or, you could buy 200 shares at $1 per share, but then when it goes up by 0.25c then you only multiply by 200, which gets you a profit of just 50c. This sort of profit all well and good if you are investing $200,000, but not so great if you are just investing $200.
Look online for penny shares information
It may be easier if you look online for the latest penny shares information. The banking versions of investment information are often created for the intermediate and advanced investor. They are not really suitable for newer investors, so why not try getting your penny shares information from other websites. There are literally hundreds of websites that have information about shares, and some of them are quite reliable.
You can start to look at graphs showing the progress of companies, and you can see how their yearly statements have affected their share prices. In essence you can start to manufacture your own method for finding the best penny shares and judging which ones are worth your money. By doing this you will learn how to judge your investments on your own, and you will start to learn little tips that will help you.
Make your first buy and sell online
The buy and sell features with HSBC’s invest direct are very simple. Enter the ticker name of the company you want to buy shares in, and up will pop their name and the price you can buy their shares at. Name how many shares you want, it will give you a price, and you accept or decline. It may take a while for the purchase to happen, and it will take even longer for your money to be taken out of your current account. When the price rises you can do a similar thing to sell your shares via the invest direct selling tool. You may use their tools to see how many shares you currently own too.
Photo Credit: Flickr/401(K) 2012