Aside from the dot com boom and crash over the 1990′s, the loads of new opportunities available out there for making money online, the new economic changes happening across all different industries in virtually every career path, we are always going to remember that one thing that has been around and stayed relatively the same, in its nature, over the past several decades: the stock market. Unfortunately, the stock market is defended largely by terminology, similar to many other fields. If you know the terminology and how the entire system works however, chances are you are going to have a much easier time generating some extra income or revenue using the stock market.

There are a few things to be said about the stock market. The first is that before you enter a deep fantasy of getting rich off of stocks, you should remember how many people lose money everyday using stocks, and also – the countless different stories of “getting rich off the stock market” are bound to hype up the entire system a lot more than it really deserves to be. But then again, here is the bright side of the matter – the stock market and the economic principles it follows is based off of a set of concepts that has been tried and testing numerous times over the years. While the stock market is never entirely predictable(just as the general economy is never entirely predictable), it is certainly easier to predict your success in stocks than it is in other areas.

For instance, if you have the capital to begin investing, then you probably have a good idea of how to generate money already and you’ve put your risks behind you. Starting a new business of your own, trying to sell a new product, and just generally carrying out any sort of new project you wish to monetize is probably both a more uncertain and a riskier venture than that of intelligently investing in stocks.

But before you invest in stocks, there are a few things that you should know that are vital to your success. The first thing you need to consider is how much money you have to work with. While financial concepts are connected to all other facets of your own individual personality and morals, which are in their nature somewhat abstract, finance(and especially finance in stocks) should never be treated abstractly. Instead, you must always resort back to any proven science that you know of at all during your decision making process. The stock market is based on numbers, and a mathematical flow of change. You cannot easily influence the success of your stocks or wealth the same way you might be able to your own business – there is no magical thing you can say or do to interfere with the world at large.

The entire aspect of a lack of control and an emphasis on intelligent choice is perhaps one of the scariest things about it. Given enough research however, there are few things you have to be afraid of. Having said that, consider some pieces of information. Did you know that you are going to make more guaranteed money on a short term basis putting money into CD’s(or certificates of deposit), and money market accounts than to invest in stocks? Did you also know that if you have less than $10,000 to invest, you are probably better off not investing in stocks directly, but instead putting your money into a mutual fund?

Let’s say you are ready to directly invest in the stock market. What you should have ready to go:

You have an emergency fund ready at all times, regardless of whether or not you are investing in stocks, with 5 to 6 months of expenses paid for, and in savings. How many people do you know that have an emergency fund or an account that has money stored away for emergency services? The interesting thing here is that if you do have an emergency fund, it is easily possible your friends do too, or perhaps your family might. No matter what you’re surrounded by, this is always a thing to work toward.

If you’re desperate for money, or are struggling to pay rent, now is not the time to invest. If you have an ill mentality about money and you do not have a mindset, along with a set of actions, that allows money to be attracted into your life – you are definitely not ready to invest, period. Another thing that applies to this whole ordeal is debt. If you have any debt at all, credit card, insurance, bills to pay, or otherwise – you always, always, always pay off your debt before considering investments. If you’re in the black, you’ve got your own back, if you’re in the red you might be as good as dead.

Never invest any amount of money that you can’t afford to lose. This still kind of fits with having an ill mentality, but this is a specific rule that is important, because sometimes people think that they have to jump on certain stocks or opportunities at a certain time before the chance passes them by. This usually results in the decision to move a large amount of money out of their pocket at a time when they probably need it most. Bad choice, folks, always hold onto the money you need at the time you need it, no matter what your friends, family, colleagues, or anyone tells you. And that brings us to the next point.

Do not ever invest in stocks purely on the basis of what someone else tells you. If you know any insiders(or people working for a company you’re thinking of investing in), you should remember that their opinion does count, but it cannot be the only opinion that counts. Every single stock you purchase must have extensive research done on it. Listening to one point of view is the same as only looking a single direction the entire time you’re driving across town – it’s dangerous and at some point you’ve got to check your side mirrors, over the shoulder, etc. Multiple points of view, in any financial decision, are always the route to go as to what you let influence your choices. Heed others’ advice, but look at the solid figures and facts in addition to that.

Virtually everything I have learned here seems to be coming from some great sources. If you’re looking for more beyond the net, I’d recommend checking out the “For Dummies” series of books, particularly Stock Investing For Dummies. If you’re clueless about finance in general, these books are a great place to start, but similar to investing in stocks, the same mentality must be taken with investing in knowledge – use only places you initially see as starting points, but keep looking for more information at all times.

The world of stock investing is a different world in comparison to what many others are used to. My grandma wrote me a letter recently that said: “a day trader is someone who tries to buy stocks in the am and sell them in the pm for profit – this is not an investor, it’s a gambler,” or something to that extent. Some have been successful for what is called “short term trading” and others haven’t. Your safest route is thinking the long term, in the more guaranteed, and in the secure.

Thanks for reading. :)

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