The stock markets are the primary indicators of a nation’s economic health. They are also the biggest drivers of change in individual wealth. Keeping money in term deposits or retirement schemes can never earn you as much returns as the stock market can.
If you are planning to earn a decent return on your investment, consider these 5 ways to trade in stock markets.
Blue chip stocks
One of the safest stocks on the market, blue chip stocks can provide you a part of the best companies in the nation. The blue-chip stocks belong to companies that have a stable and proven track record and have recorded consistent growth over the years.
There are no second guesses with blue chip stocks. They are the best in the industry and provide serious gains as well.
However, blue chip stocks could be very pricey. Therefore, you will need a significant capital to invest in these funds. Mostly, the volatility of these stocks is also low. You can buy these funds and forget. They will keep adding value and returns to your portfolio over time.
If you know an industry well, like technology, oil or banking, invest in those stocks. This is an easier way to find the best companies the market. As you are already aware of the companies that have a proven record, you could easily add their stocks to your portfolio.
A good thing to note about searching industry specific stocks is that you can find value investment opportunities with ease. Such opportunities occur when a stock, which has strong fundamentals, is underpriced in the market. Holding these stocks for a bargain price will help you earn great rewards too.
If you are looking for diversification of funds or have only small amounts to invest, mutual funds are your perfect companions. These funds pool money from various investors and then place it into several different stocks.
Mutual funds could be growth oriented, dividend oriented or could be equity or debt oriented. You can choose an instrument that suits your needs and get started right away. A qualified fund manager handles your money. Therefore, your capital is more secure and provides better dividends as well.
If mutual funds don’t suit your needs, opt for index funds. These funds monitor industry indexes like the Dow Jones Industrial Average or the S&P 500. They usually work on the underlying growth of the entire market, not just a single stock. As markets have only gone up over the past several years, they are the perfect instruments of investments.
This trading style is only for active and experienced investors. Day trading refers to a method in which you try to earn money by playing on daily market fluctuations. Stocks could be very volatile over the course of a day. Therefore, it is very risky trading type but can also offer humongous returns when done right.
We hope that you will invest your capital after performing due diligence. Do not jump into any stock or financial instrument without careful scrutiny first. Be a proactive investor and learn how to handle your money effectively.