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How to manage your first stock portfolio - Bank Clip

How to manage your first stock portfolio

New to investing? It can be a challenge to balance your business and other demands on your time with keeping track of your investment strategy.

People get into investing to make money, however, it’s important to realize that simply investing in stocks doesn’t mean you’ll end up with more money (or a specific percentage of more money) than when you started. It’s possible to lose money, especially if you invest in riskier stocks, don’t know much about investing in the first place, or are a novice investor.

Control your risk and keep your investing in check by deciding on the sum you have available to invest, and in a worst-case scenario, what you could afford to lose. It should be an amount that you will not need access to in the near future and that will not be distressing to see diminish. In other words, don’t invest more than you can afford in the hopes that you’ll get more money in the end.

That is particularly pertinent for entrepreneurs and small business owners. You want to make money to finance your business, not endanger it, so make sure you keep enough funds on hand to buffer your business against hard times.

The best thing to do is to start small (many investments have a minimum buy-in) and gradually invest more as you gain experience and a clearer understanding of how things work. Setting a clear limit for yourself can help you keep your head and not get swept away by every investment opportunity that comes along.

Successful investing is helped along by some expertise and knowledge about the business sector in which you are considering buying stock. As a beginner, you may not know a lot about investing, but you could have built up some other knowledge through your working life that could be very useful.

You could be very well informed as to the local or regional business climate because you did market research prior to launching your small business, or you sit on the board of a company and have your finger on the pulse of economic growth in your area. You might have learned a lot from your suppliers or have had mentors in other business sectors. One thing to note: understanding an area of potential investment in depth is different than insider trading. Acting on private information (buying tips) can get you in trouble, however, making full use of your own experience or understanding of a sector, region, etc., is just good sense.

Also use quality news sources to keep up to date on trends. You’re busy running your own business, so you can’t spend all your time researching investment options and health. Find a few good sources you can trust to keep you in the loop. Stocks and shares calendar tools can be useful, as can sector or region-specific journalism, subject-matter-focused blogs, etc. A combination of at-a-glance updates and deep-dive journalism can keep you informed and constantly learning with minimal time investment.

Correctly handling your first stock portfolio is essential. Set healthy goals for yourself, start slow, and play the long game to create a strong financial stance for you and your business. Do your research, benefit from learned experience and subject matter expertise, and pick a few trusted sources of news to inform your investment-related decision making and scale up slowly as you gain confidence.