9 Ways to Learn Stock Investing for Beginners from Scratch

Public awareness of investment nowadays seems to be increasing from time to time. Currently, investment products are increasingly accessible to the public due to the emergence of system online trading which allows stock trading activities do not need to be carried out by coming to a securities company as before.

If you hear the term stock trading, you may be pictured with a fluctuating stock price chart image.

Activity trading stock may be seen bullying For beginners who are not familiar with stock investing. Beginners in the field of stock investment may also feel confused because of the doubts about learning resources and what initial steps to take to learn stock investing.

Moreover, stock investment is not only a matter of large investment returns, but there are risks and price fluctuations that are often unavoidable.

Well, as a practical provision trading stocks, investors can pay attention various stock learning tips for beginners below in order to avoid risks and optimize the potential benefits.

9 Ways to Learn Stock Investing for Beginners from Scratch

Here are 9 ways to learn stocks for beginners that can help potential investors in determining the initial steps to invest in stocks.

Starting from now

Learning about stock investing will be better if you start as early as possible. With the introduction of stocks earlier means it will make it possible for investors to start investing faster. Investments that are as early as possible will make investment assets and income from stock investments more massive in number.

Therefore, the younger the age of starting investment, the easier it will be to prepare for achieving investment goals in the future.

Setting Goals

In starting to learn stock investing, it would be better if the prospective investor first determines the purpose of his investment. By determining investment goals, the direction of learning stock investment and which company shares are selected will also adjust to these goals.

In addition, because the goals have been set, investors can determine how long the investment period is according to these goals.

The investment objectives that often occur are funds to buy a house, buy a vehicle, prepare to open a business, prepare for education funds, travel, prepare for retirement, and so on. You can also discuss investment goals with your family and relatives for a more organized investment decision.

Learn the Characteristics of Stock Investment

To learn stock investing, of course, the first step you have to do is to find out as much information as possible regarding this investment product. This is done because the investment will usually follow the risk profile of the investor.

If potential investors are deemed less able to organize the risk of stock investment, investors may be able to explore investment products with less risk, such as: bond and mutual funds.

The risk of stock investment is generally divided into two, namely systematic risk (systematic risk) and unsystematic risk (unsystematic risk). Reported from Investopedia, systematic risk or what can be referred to as undiversifiable risk is a risk that affects all aspects of the stock market in general, not just a particular company sector.

Meanwhile, unsystematic risk is a risk which only affects a particular company's industry. Unsystematic risk can be mitigated by diversifying stocks.

The rest regarding stock diversification will be explained in the next point. In addition to risk, investors must also know the income or profit (return) what you get while investing in stock instruments in order to optimize profits.

The advantages of investing in shares are in the form of dividends and capital gain. Dividend is the percentage of profit from the company that is distributed to investors.

Meanwhile, capital gain is the difference between the selling price and the stock price. If the decision is ripe to want to explore stock investment, investors need to deepen their knowledge about this stock investment.

Learn Various Stock Value Analysis

As a provision in investing in stocks, investors can learn various stock analyzes to increase profit optimization and minimize the risk of losses that may occur. Stock analysis is generally divided into two, namely fundamental and technical analysis.

Fundamental analysis of stock value is an analysis in determining the value of shares based on economic conditions and factors financial of the company whose shares are to be purchased.

Meanwhile, technical analysis is done by looking at historical data from stock prices. Beginners in stock investing do not have to understand this aspect in detail. The most important thing that might be a tip for novice stock investors is that investors can minimize risk by choosing shares of companies with good economic and financial conditions.

That way, as an initial step in investing, investors can conduct fundamental analysis – no need to be too detailed – in choosing company shares.

Enrich Yourself with Financial Literacy and Company News

The next tip in learning stock investing for beginners is that potential investors can always enrich themselves with financial literacy. If this step can help potential investors understand various terms in stock investment, for example, ARB shares and ARA shares. Then, investors can also find out the terms in the stock trading mechanism, for example: bid price, ask price, hold stocks, and so on.

Investors can also optimize profits by knowing many terms in stock investment and news related to company performance. To get news about the company's performance, financial literacy, as well as news about the latest startups, DailySocial.id can be the right medium for you!

Choosing a Trusted Securities Company for Practice

The first step in learning stock investing is to choose a trusted securities company. A securities company is a company that obtains a license to be able to trade securities.

Investors need to pay attention that securities companies and applications trading trusted ones are those who have been approved by the Financial Services Authority (OJK). Don't get involved in fraudulent investments because you haven't checked the OJK license yet platform your investment!

Determining Investment Capital 

For beginners in stock investment, the determination of capital in investment is very important as an initial investment step. Learning stock investment will actually be much more challenging if potential investors practice directly by opening an account with a securities company and submitting the first capital.

Investors can look at the funds in their pockets first to decide on the capital and monthly investment commitments they want to implement.

For students who want to learn about stock investing, don't worry because currently buying shares in one lot can be done with minimal capital. If possible, you may need parental assistance to avoid the risk of excessive losses.

Buying Featured Stocks

Through fundamental analysis of stock values, investors can determine which shares of leading companies will provide benefits for our stock investment.

For beginners, investing in company shares with good fundamental aspects is highly recommended so that investors do not experience surprises because changes in stock prices can be very large. One of the tips that can be done is that investors may be able to invest in companies listed in the LQ45 index. 

The LQ45 index is an index that contains 45 shares of issuers. Forty-five companies in the LQ45 Index have high liquidity and capitalization on the Indonesia Stock Exchange (Tandelilin, 2017).

Companies listed in the LQ45 Index have proven to have a good average performance in the past year. That way, the shares of companies listed in LQ45 are a suitable choice for beginners who want to start learning stock investing.

Build an Attractive Portfolio

Portfolio is a collection of stocks that investors can choose to invest which then investors are expected to be able to provide optimal profits. In starting stock investment, investors may be able to buy a lot of shares first if the funds they have are limited.

After that, investors are advised to invest in shares of companies engaged in different industries. "Don't put your eggs in one basket," is probably one of the phrases in the investment world that are quite familiar to you.

Investors need to invest in stocks with diverse industries, because if the stock price drops, there are other stocks that can compensate investors for profits.

It's like putting eggs in a basket, if the basket falls, no eggs can be saved. This also happens when investors invest a lot in one company's stock.

The activity of building a portfolio – a collection of stocks – with a variety of stocks with different industries can be referred to as diversification activities. Diversification is the activity previously mentioned to reduce unsystematic risk in the capital market.

The act of building a portfolio has a goal so that investors can minimize losses. Buying superior stocks with diverse industries is expected to provide optimal benefits for investors. Always remember that buying a stock just because stock FOMO alone is not wise.

An investment must always have return and risk. Learning about stock investing can be done independently with steps that don't always have to be big. Consistency in adding reading material or adding to a stock portfolio is the most important thing. Hopefully the optimization of the profits you get through stock investment can bear fruit!

Reference:

Tandelilin, E. (2017). Capital markets portfolio & investment management. Yogyakarta: PT Kanisius.

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