How can I retire early? What must I do to save up enough for my retirement? What must I do to ensure that I live comfortably when I retire?
These questions have been pondering in the hearts of so many, and had left many of them with sleepless nights. To be honest with you, I’ve had my fair share in the past. To be happy in the future, you need to create a sustainable income that would take care of your needs when you’ve stopped working.
The absolute best way to achieve this is to save and invest for the future.
If you want to learn how to start investing for early retirement, then this article is for you. You’ll gain a first hand knowledge on how to make money investing in stock market, which is a better alternative for early retirement plan.
If you’re a pro investor, I think you’ll be familiar with the context of this article, but you can still learn some strategies on how to improve on your wealth of experience. However, if you’re just hearing of “investing in stock market” for the first time, or you’re trying to get hold of some materials that would gear you towards the right direction, then this is a step towards the right direction.
People who don’t invest in the stock market have their reasons, and their opinions about the stock market are different. To some; it’s the fear of losing their money, and to others; mistrust, maybe they’re lucky or not, or just curious of the outcome, whether they can beat the market based on instinct.
Some newbies believes that trading or investing in stock market is a gamble (Although it is, if you invest blindly, or out of emotions and improper calculations), however, they are wrong about it. You’ll only say that investing in stock market is a gamble because you don’t know how to trade to win.
If you’re confident on how to successfully invest in stock market, then you’ve bought yourself a lifetime ticket of steady income for your retirement plan with no effort or work.
What you need to know about stocks.
Buying a stock of a company means owning a percentage of that company. When you own a share of a company, you’ll become a shareholder, and have rights to participate in decision making, voting, and sharing of the company’s future earnings (which is known as dividend). Dividend are percentage of the company’s profits that are shared among shareholders, based on their amount of shares.
Some companies pay a fraction of their profits to their shareholders, while they grow gradually, while some invest 100% of their profits into the business for rapid growth.
How valuable is the company you want to invest in?
The value of your stock is calculated based on how much profit (dividend) it fetch you. The higher your shares in a company, the higher your percentage when it comes to profit sharing.
Several factors makes the price or value of a stock to increase or decrease. For instance; the stock of an oil company would definitely skyrocket if there’s an increase in the demand of oil commodities. On the contrary, if there’s a sudden change from the usage of fuel combustion vehicles, to electric vehicles, then value of the stock of the oil company would decrease because the demand for oil commodities would decrease.
Buying stocks for the first time
If it’s your first time investing in stop, then the first step is buying them. It can be very exciting for beginners, most especially after seeing people raking 6-7 figures from stock. However, it can be very challenging. You need to learn how to be cautious and play safe. Therefore, I’ll advise to learn it properly before venturing into it.
Here’s a good article covering this topic: https://www.nasdaq.com/investing/start-investing-1000.stm
Long term vs Short term
Stock prices fluctuates always, due to the volatility of the market. Short term trading is more of a gamble, because you never can tell the seconds when the price would drastically rise or fall, and if you’re not careful, you might go bankrupt in a blink of an eye.
Long term investment is a better option. Sometimes even if your stock value falls, it would gradually rise again, and you’ll have the opportunity to make profit from it.
Which stocks to buy to make money?
The best way to invest in stock without much headache is to buy ’em all. Several smart researchers suggests that the best way to make money from stock market is to buy an “index fund”. This is a mutual fund that automatically buys an equal fraction of all the major shares in your country.
When you buy all of the major stocks, some would rise, and some would fall, but in overall, you’ll make above average. This is the best strategy for even that anyone can use to make money from the stock market.
If you choose to do some calculations, then invest your whole cash in a particular stock, and it fails you, then your retirement plan would fail. So it’s better to invest in index fund, and have peace of mind. It’s no doubt that you can only earn very large if you invest a huge sum in a particular stock that grew so rapidly, however, would you be able to survive it if it falls so drastically?
What type of index fund you should invest in?
Invest in The Vanguard Total Stock Market Index Fund, and you’ll thank yourself later for doing so. They track the entire of U.S, with the expense of just 0.17%. This is the cheapest you can get, however, if you’re looking of employer-sponsored plan, maybe you should try the S&P 500 Index fund.
There are the International trust funds as well. They are great buy, most especially when the U.S is hurting, it would give you a high ROI.
Whichever stock you’re investing into, the main goal is to retire early and have enough to take care of yourself. Just remember to never lay all your eggs in one basket. Learn how the stock market works, go about it slow and steady and I’ll bet your retirement would be a luxurious one.