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Investments can feel overwhelming and intimidating, particularly if you’re a novice investor or a young professional deciding how to grow their money. The concept of investments is simple enough until you get into the stock market, and then it can feel daunting. In reality, the stock market can be a significant way to grow wealth if you take small, calculated steps. Canadians looking to begin their investment journey and enter the stock market should pay attention to these do’s and don’ts in order to maximize their experience and profits.

Do: Start Small

The stock market is an in-depth machine with thousands of companies and potential investment opportunities — so it’s important to tread lightly if you’re new to the experience. As a novice investor, you’ll likely have a minimal amount of capital to contribute, which is beneficial, because you’re subjected to less risk and don’t have to resort to bad credit loans to supplement your losses. As you gain more confidence and you begin to understand how specific industries operate, you can make decisions in the future to move around your money or purchase additional stocks.

Don’t: Panic

The stock market will change daily, especially in competitive industries like finance or technology. It’s natural for your money to rise and fall throughout your investment. It’s essential to keep a watchful eye but to refrain from panicking and pulling out your money right away — you could be losing a lucrative long-term investment opportunity.

Do: Plan Long-Term

The goal of investing is to build more capital over a long period of time, and playing the stock market is no different. Investing allows you to compound your money but requires considerable time and effort in order to produce results.

Don’t: Hold onto Money You’re Losing

If you’re watching your stock fall for an extended period of time, it’s likely time to pull your money. While it’s natural for stocks to rise and fall, a prolonged dip is going to impact your investment negatively. Maintaining realistic expectations is crucial to a healthy financial mindset and will help you make strategic decisions going forward.

Do: Diversity

Diversity should be a word that is constantly in your mind as you begin to invest. If you invest in a single company, you risk losing your entire investment if something unfavorable happens and the stock tanks. Instead, select a small handful of companies or industries to invest in to maximize your chances of compounding your money.

Don’t: Make Emotional Choices

The stock market can play on your emotions if you’re not careful. If you notice a company generating a lot of buzz, that doesn’t mean it will be a worthwhile or safe investment. The same can be said for the opposite side of the spectrum — just because a company isn’t flashy or exciting, if it produces solid stock prices and interest rates, it may be worth keeping your money invested.

Acting on impulse is often reserved for experienced investors who know the market thoroughly and have made similar moves before. As a novice investor, your goal is to make intelligent decisions for your portfolio so you can enjoy your money when it’s time to pull your investment.

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