How do most people become billionaire stock market investors starting with limited capital?
(I am just curious as to how ordinary everyday people go about becoming billionaire stock market investors, and what they do to create such substantial wealth from minimal capital, say, a few thousand? How do they do it?)
Answer:
Jeez. People really don’t answer properly do they?
I have to admit, as an investor, I found it really difficult to make money in the beginning. The smaller the size of funds, the less you can buy, the less the chances of success.
In reality, the best way as starters, is to
a) ignore what others are saying about a stock
b) invest in something you as a consumer know best–look around you–what are your friends all starting to buy? Lulu-lemon, Starbucks, all started off the exact same way, and industry heavyweights like Peter Lynch still try and observe such regular buying trends.
c) purchase no less than 100 shares. Trust me, less than 100 shares, means that even if the stock goes up $1, you won’t make even $100!
d) reinvest profits into additional shares
e) don’t diversify too much–sounds counter intuitive, but in reality, when you have a small amount of funds, don’t put it in too many baskets! The more the baskets, the less the chance of big returns.
f) don’t take your loss unless you really really think the company is going to go bankrupt, or will not survive the downturn. If its a small short-term decline in profits–heck, stick to it.
g) don’t give up and look at how to understand the underlying profitability of a company!
I have to admit, as an investor, I found it really difficult to make money in the beginning. The smaller the size of funds, the less you can buy, the less the chances of success.
In reality, the best way as starters, is to
a) ignore what others are saying about a stock
b) invest in something you as a consumer know best–look around you–what are your friends all starting to buy? Lulu-lemon, Starbucks, all started off the exact same way, and industry heavyweights like Peter Lynch still try and observe such regular buying trends.
c) purchase no less than 100 shares. Trust me, less than 100 shares, means that even if the stock goes up $1, you won’t make even $100!
d) reinvest profits into additional shares
e) don’t diversify too much–sounds counter intuitive, but in reality, when you have a small amount of funds, don’t put it in too many baskets! The more the baskets, the less the chance of big returns.
f) don’t take your loss unless you really really think the company is going to go bankrupt, or will not survive the downturn. If its a small short-term decline in profits–heck, stick to it.
g) don’t give up and look at how to understand the underlying profitability of a company!
Posted: July 26th, 2010 under US Stock Market.
Tags: billionaire stock market investors, Stock market