The Motley Fool

How to invest in the stock market

So, you’ve seen the headlines recently. High volatility in stock markets around the world has seen billions of pounds of value added and taken away from blue-chip companies. You’ve maybe twigged to the fact that you and your friends have been ordering deliveries on Ocado a lot more over the past few months. A quick look at the Ocado share price shows that the stock has surged in value since the start of the pandemic. The same can be said of US-listed firm Zoom, and many others. This has led you to search for how to invest in the stock market, and landed you here!

First things first

Investing in the stock market can be a very rewarding experience. But before you actually enjoy the feeling of seeing a stock rise in value, you need to get your basics right. Firstly, you need to get yourself set up on a platform where you can buy and sell stocks. There are countless providers out there for this.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Make sure that whoever you choose also has the ability to operate your Stocks and Shares ISA for you. An ISA is a valuable tool provided by the government that allows you to invest up to £20,000 a year without paying tax on the proceeds. So if you’d invested in Ocado at the beginning of the year and were now sitting on a 75% gain, this profit would be all yours.

Also, be careful not to mistakenly sign up and start using a trading account with leverage when investing. There’s a difference between buying £1,000 worth of HSBC stock in your ISA, and leveraging £1,000 fifty times on a spread betting account. The latter actually gives you a £50,000 position, which means your losses could exceed your initial deposit amount.

Investing tips

Once you’re all ready to go, it’s up to you what you want to buy. Some stocks you’ll have already heard about and want to buy. Some great success stories in the public eye are Ocado, JD Sports, and Rightmove. Even as a UK investor, you can buy US-listed stocks as well, such as Amazon and Tesla.

Try to mix up what you invest in, both in the amount and the sector. Splitting up your initial investment between a dozen stocks should serve you much better than putting everything into one company. Mixing up sectors as well should help to diversify your overall portfolio. If you just invest in one sector, then you could be very exposed to something negative impacting that set of businesses.

Once you’ve invested, try and forget about the stock for the moment. Try to detach yourself from the emotional side of investing and be purely subjective. For example, let’s say you buy Ocado shares now with the aim of selling when you reach 20% profit. Set an alert for this level, along with one if it falls by 20%. Then leave it. Monitoring the share price every hour of every day is only going to send you crazy!

This is not a complete guide on how to invest in the stock market. It’s merely a taster of some things to do. As such, I’d suggest reading the top stocks for August from the Motley Fool authors, where you can find even more unbiased advice.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. jonathansmith1 has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon and Tesla. The Motley Fool UK has recommended Rightmove and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.