The stock market can pave the way to riches for anyone, from any background, willing to invest some money and time. Money is required to get started, and time is necessary to ensure you make the best choices when deciding where to invest your hard-earned cash.
With 2,600 businesses listed on the London Stock Exchange, getting started can be daunting. Companies offer a mysterious minefield of potential, which can easily mislead you into investing in something with little hope of realising the promises they’re making.
However, it doesn’t take much to learn the basics, and once you know what to avoid, the path to riches becomes clearer.
By immersing yourself in a subject, you soon understand it. This is part of a lifelong learning journey that makes you smarter.
Lifelong learning is the continuous pursuit of knowledge in a voluntary and self-motivated way for personal or professional purposes. The internet and an endless supply of information on any subject under the sun have made lifelong learning easier than ever before.
If you’re interested in discovering more about the intriguing world of stock market investing for personal or professional advancement, then you’ll have no trouble finding information on the subject.
But the abundance of such information can make it difficult to sort the genuine from the shady. However, following a few golden rules will keep you on the straight and narrow.
- Seek out well-established companies with a solid trading history
- Stick to the FTSE 350 when starting out
- Choose a business that pays dividends
- Be prepared to buy and hold
The reason that last rule matters is that the key to successful wealth generation through stock market investing is the power of compounding. This is when your initial investment gains interest and then you gain further interest on that interest. Confusing? Well, it’s simpler than it may sound. It means your initial stake keeps growing, and if left to accumulate, the wealth can be staggering. Some stock market investors have even become millionaires.
Financial markets make the world go round. They’re heavily ingrained in society, influencing world events and influenced by world events too. The more you monitor the UK stock market, the more you’ll notice how it fluctuates with daily news.
Whether you invest in one company or 10, it will broaden your awareness of the world around you. Companies and their successes can be a great conversation topic.
But I think that discovering new things about the markets and gaining knowledge doesn’t just make you smarter, it makes you happier too. How so? Well, as you see your investments paying off, you should feel happier they’re doing so and glad that your decisions to pick quality shares were the right ones.
If you’ve done your research and invested in long-established companies with further to grow, then you should become richer along the way.
Why does gaining wealth matter? It gives you a feeling of control. Whether you want to support the loved ones in your life, or you would like the peace of mind a nest egg would bring, having money allows you to control your own destiny, something that should improve all our lives.
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Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.