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Responsible Investing: 14 Tips For First Time Investors In The Stockmarket

Investing in the stock market for the first time can seem like a scary and daunting task. But it’s really not as hard as you might imagine. We reached out to stock market and financial experts to get their take on things first-time investors in the stock market should know. Here is what they had to say…

#1 Stay diversified

Ideally, you would own 5 or more stocks that are not correlated with each other. I.e. don't buy 5 tech stocks. Buy 1 tech, 1 financial, 1 health care, 1 services, and 1 basic materials. This kind of sector diversification will protect you in case 1 sector goes out of favor.

Contributor: Mike Scanlin, CEO of borntosell.com 

#2 Stay away from high risk events

These include: earnings releases, FDA announcements, M&A rumors, new product launches, etc. If you're a long-term investor then okay, you can't avoid all of those. But don't buy a stock the day before one of those events and hope for quick 5-10% pop with the intention of selling the next day. That's not investing; it's gambling.

Contributor: Mike Scanlin, CEO of borntosell.com 

#3 Never invest money that you might need in the short term (1-3 years)

Never invest money that you might need in the short term (1-3 years) because there is a risk that you will be forced to sell when the market is down. Put that money in more conservative places like CDs or high yield savings accounts.

Contributor: TimStobierski founder and editor of studentdebtwarriors.com

#10 Know your risk tolerance before you get started

Imagine that you are investing $10k and plan to need the money in ten years. If the value of your investment dropped rapidly to $8k, do you think you would panic and sell? Or do you think you'd be able to keep your cool for the long haul? 

If you would panic, you'd probably be wiser to be a little more conservative in your investments, but if you think you would keep your cool, you can likely go riskier. There are a lot of calculators out there that can help you figure out your risk tolerance.

Contributor: TimStobierski founder and editor of studentdebtwarriors.com

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Written by Nathaniel Fried

Co-founder of Fupping. Busy churning out content and building an empire.

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