How to learn stocks for beginners is an important step to get maximum profit from stock investment. Stock investment is the instrument with the best returns.
How to invest in stocks? How to play stock? Is it possible to invest in stocks online? Based on my experience in the investment world, I have compiled the 10 best tips for learning stock investing for beginners.
How to trade stocks for beginners? What is the strategy so that you don’t lose money playing stocks? Which is more profitable than investing in bonds or investing in stocks.
Understand What is Stock Investment
What is the stock investment?
This question needs to be answered when investing in stocks for beginners.
My biggest mistake when I used to play stocks was not understanding the essence of stock investing.
Because I was in a hurry to jump in, to be honest, I wanted to make a quick profit, I neglected to learn about the true essence of stock investing. Instead of profit, I lost!
From there, I learned that understanding the essence of stock investing is very important for beginners. Because all strategies, how to play, and other aspects of stock investing are greatly influenced by our understanding and perspective on what stock investing is.
What is the essence of stock investment?
In my opinion, buying or playing stocks is basically an investment in a business or business. It’s no different when I invest in a coffee shop or joint laundry business with friends or close relatives.
Shares are proof of ownership of a company.
By buying shares, I mean to become the owner (shareholder) of the company and hand over the management of the company to professional management who I believe can manage the business to increase the value of the company.
Understanding as above affects the way I invest. The way to be calm is to be calm when the stock price drops drastically because the company’s performance is fine.
Those buy up stocks when the market crashes because the stock price already looks cheap, while the company’s performance has not deteriorated at all.
Take a peek at Stock Mutual Funds
If you are learning stocks for beginners, one of the easiest ways to choose stocks is to take a peek at the stocks held by Investment Managers who manage Stock Mutual Funds.
Investment managers are required to submit a portfolio of Top 10 Shares held in Equity Mutual Funds. You can see a list of the Top 10 stocks in the Equity Mutual Fund monthly report.
On the site of an investment manager or online mutual fund selling agent, you first select the stock mutual fund you want to view the stock collection for.
Then, in the statistics or monthly performance section, you can see the Top 10 Holdings shares of the mutual fund.
Stock options for beginners can use stocks invested by Stock Mutual Funds.
Blue-Chip Stock
What stocks are good for long-term investment? What are stock options for beginners?
The way for beginners to learn stocks is to focus on blue-chip stocks.
What are blue-chip stocks?
Blue-chip stocks are shares of the highest quality companies that are sold on the exchange. This type of stock is considered the safest and promises stability in profits.
To make it easier to imagine, look at examples of some blue-chip stocks on the Indonesia Stock Exchange, which can be stock options for beginners, namely:
- Bank BCA (code BBCA) is the best bank in Indonesia with the largest ATM network, millions of customers and most importantly generating large profits for shareholders.
- Unilever Indonesia (code UNVR) is the best consumer goods company in Indonesia with various brands of household products that are already familiar to the public. UNVR’s financial performance is one of the best on the market with the ability of this stock to consistently generate profits.
- Bank BRI (code BBRI) is the bank with the largest profit in Indonesia. With a company age of more than 100 years, Bank BRI has the ability and experience in micro and MSME loans, which can be said to be without competitors at this time because all competitors who used to enter the micro and MSME sector have now retreated to acknowledge BRI’s expertise and dominance in the industry this sector.
The three blue-chip stocks above are stock options for beginners that are worth considering if you are just learning to invest in stocks.
There’s no fixed definition of a blue-chip stock, but you can usually see stocks that have a large market capitalization and are busy being traded every day on the exchange.
Stock options for beginners can start with these blue-chip stocks.
Diversification
As an investment instrument, stocks must have risks and the risk is clearly not small in stocks. The question is, how to manage risk in stock investment for beginners who are just learning to play stocks.
The formula is only one. “Don’t put all your eggs in one basket”
Lessons are very important in learning stock investing.
Diversify investments. Don’t put all your money in stocks.
With diversification, if there is a crisis in the stock market, you can survive, not panic (this is very important) because you already have savings in other instruments that are safe from the crisis in stocks.
Financial planners mention the importance of having an Emergency Fund as an instrument in case of a shock in the economy. Set aside some of your money in an Emergency Fund.
Indeed, diversification will reduce potential returns because money is placed in instruments with lower returns.
However, that is precisely the essence of diversification, that the placement of funds is divided into investments with high returns and high risks and investments with low returns and low risks.
Long-term
This is not easy. The urge to make a quick profit, to immediately generate a high return, is always strong in investing in stocks.
As an investor, you definitely want your invested funds to generate profits immediately, the sooner the better.
Why is stock investment a long-term investment?
I want to return to point #1 about the essence of stock investing that buying stocks means that I invest in a business.
In my opinion, a business needs a process, it takes time, to develop which will eventually give returns to investors.
Is it possible to invest in a business, we expect profits in daily or weekly time?
Apparently not because there are business processes that must be followed to achieve results. Can’t be instant in business!
It will take at least 1 year to see how the business develops and grows. It’s the same with stock investing, it takes time for your money to develop and grow in stocks.
Online Trading? Careful !
For beginners who learn stocks, the lure of quick profits, big profits in a short time is always an attraction. One of them is trading stocks.
What is stock trading?
I value stock trading if you buy and sell stocks in a short period of time, for example daily, weekly, or within 1 day (‘Day Trading’).
If you are trading stocks, you need to learn stock trading as a beginner and pay attention to the following things:
First, stock trading takes time and effort because you have to monitor trades all the time.
Learning stock trading for beginners, although there have been technological advances for online trading, you must focus on trading which takes time and energy.
In contrast to normal business people who hand over the company to professional management who manages and provides results after a certain period of time (1 year or 6 months), while in-stock trading you have to monitor every day, even every minute, and expect the company’s value to increase in 1 day!
Second, more importantly, stock trading hopes to profit from daily stock price movements, while the business or business (which is a reflection of stock prices) takes more than days or even months to increase the company’s valuation.
It makes no sense to me if we expect the value of the business to change in a matter of days or even within 1 day (day-trading). However, this is to be expected in stock trading.
Third, the purpose of trading is market-timing which seeks to determine when the cheapest price to buy and the highest price to sell.
In my experience, the most difficult job in stock investment is to determine when the stock price is the cheapest or the price is the most expensive.
Why? Because there are so many interrelated factors that affect stock prices, for me market-timing is a very difficult job.
Stock Prices Drop? Buy!
The stress test when playing stocks is when the stock price drops and sees the value of money in the stock eroding quickly. Price movements in stocks can fluctuate from 1% to 2% per day if the market is volatile.
In that situation, your investment guts are really tested. Do you survive or give up throwing the towel out of the stock investing ring?
When it was my first time investing in stocks, I was honestly stressed seeing the price of the shares I bought drop drastically, the investment portfolio was left half of its initial value in a matter of days.
However, over time I learned important things about crash markets:
First, a crashing market is a ‘golden opportunity to buy stocks cheaply. But there is a prerequisite.
You must be sure that the stock you buy is a company that has good performance and finances.
For this reason, always be prepared to monitor and identify which stocks have solid performance and grow their business so that when stock prices plummet due to market sentiment, you already know which stocks to buy.
Second, no matter how deep the stock price declines in the market, the stock price will rise again and usually even rise higher than the previous level.
How to Play Stocks: Enjoy !
If you have to check stock prices every day, then worry about the stress of seeing stock prices fluctuate up and down, stock investment can’t be enjoyed.
His nature is tense every day and it is clear that time and energy are wasted on managing stocks while there is other work to be done.
How to enjoy stock investment?
Stocks are a type of investment that, if done right, provide financial freedom. You can keep working and let your investments be run by professional managers.
I don’t look at stock prices every day because I believe that professional management who manages the company is able to increase the value and performance of the company, which in turn will be reflected in the stock price.
What I do regularly is read and research the company’s performance. Analyzing financial reports, examining research reports that are routinely provided by securities brokers, and participating in discussions in stock forums.
Find Valid Info & Follow RUPS
In stock investment, the role of information is very important. The decision to buy and sell shares is based on the information they have.
In learning stocks, beginners should pay attention to sources of information.
The problem is, many people do not refer to valid information. But because of rumors, sell because people say the stock is bad.
Meanwhile, actually, there is valid information from sources that can be accounted for, and the information is free, can be obtained free of charge.
What’s that?
The management of the Indonesia Stock Exchange, namely the Indonesia Stock Exchange, opens access to information on companies whose shares are listed on the Exchange for free to the public. You don’t even need to be a shareholder to be able to access this information.
This information comes from the company, not rumors and not the result of analysis, but official information released by the company.
In learning stock investment, there is some information, which is very important for conducting stock analysis, namely:
- Financial Reports: must be submitted every quarter, mid-year, and year-end regarding the company’s financial condition. It is very important to evaluate the company’s performance
- Annual Report: must be submitted at the end of each year containing a comprehensive study of prospects, business, finance, and company management.
- Corporate Action: reports related to the company’s corporate actions that affect stock prices
- Public Expose: once a year the company is obliged to deliver a presentation to the public about the development of the company’s performance. Public exposure presentation materials can be accessed.
All the information above is free.
Start Even With Small Capital!
There’s nothing more exciting than getting started. In fact, I was too early to start investing in stocks, so I forgot to learn the basics well.
To start investing in beginner stocks, there are a few things you need to pay attention to:
First, learn how to invest in stocks online. Currently, online stock transactions are the easiest and cheapest way to invest in stocks.
Don’t worry about opening an account because many securities accommodate online openings and documents can be sent via courier so you no longer need to come to the securities office to open a stock investment account.
Second, small capital is not a problem because currently, the minimum transaction requirement on the exchange is 1 lot, which is 100 shares.
Back again, to the previous point, I suggest starting from blue-chip stocks. However, stock investment decisions are very subjective, what is suitable for me may not be suitable for you.
Fourth, make a stock saving plan by setting a stock investment budget every month.
For example, if you buy BCA shares, you need Rp. 3 million to buy 1 lot (BCA price is Rp. 30 thousand per share), while BRI needs Rp. 400 thousand to buy 1 lot of shares with a share price of Rp. 4 thousand.
Third, choose the stock you want to buy. At the end of the day, you have to decide what stock to invest in.