Risk Free Lesson on Investing
If you’ve just started investing the truth is that you’re probably scared to death about putting your hard-earned money at risk. After all, investing is risky and, as a newbie, you have anxiety that you won’t do it “right” and lose some of your hard-earned money.
The truth is, a little bit of fear is absolutely normal. That being said, today we’re going to give you some great advice about how to learn some investing strategies, and give them a practice run, before you actually begin to invest your hard earned money “for real”. Enjoy.
Create a mock portfolio online
Okay, let’s say that you gotten comfortable with the basic mechanics of investing, like researching the company whose stock you want to purchase and deciding how and when to place your orders for buying and selling. If that’s where you are, you can create a mock portfolio online and see how any decisions you make play out, even if it’s just over a short period of time. One caveat however is that you can’t draw a lot of “big conclusions” based on how your stock choices did, and how the market behaved, over a few weeks or months.
Setting up an online portfolio to use as your mock portfolio can be done on sites like AOL or Yahoo finance for free. You can enter mock details as to when you purchased shares, and at what price you purchased them. Then you can track the performance of the shares and see how your holdings behave over a few weeks or months. This is a great technique to learn more about yourself and your own investing habits and skills.
For investors who are a little bit more experienced
Even if you are what most would consider a seasoned investor, a mock portfolio can assist you in a number of ways. For example, if you’ve just read about an investment strategy that you think looks good, and you’ve seen a few reports on back testing showing that it worked well for others, you can do a trial run using your mock portfolio to see how it works when you do it.
You can use this strategy to see what happens with any stocks that you invest in and, if the strategy seems to be working, start investing with real money. If it’s not, at least not for you, then you save yourself some time, headaches and money that you didn’t risk.
Frankly, the thought of all of this work creating mock portfolios might be enough to give you a headache and, if it has, you can actually skip this altogether and simply invest in a few low-cost stock mutual funds instead. It’s relatively easy, low risk and over time you can add to it too. For a beginner investor there’s certainly no shame in doing it this way, and it’s low risk to boot.
Filed under: Investing
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