Smart Stock Market Investing

Fluctuation, the market goes UP...the market goes DOWN...how simple!

For many of us the shape of the market day to day has about as much influence on our lives as the time of the tides that day. But for investors - especially first time investors - it can be a rollercoaster of heart racing highs and stomach churning lows. Every movement is being carefully reviewed and if it turns down then investors with itchy feet jump out.

If you know the benefits of investing, how can

you avoid the stress of putting your hard earned money into the market?

Financial planners and investors are quite clear on the subject. New investors should not make an investment unless they are going to let it sit at least 5 to 7 years - the longer the better.

Why?

Well, the economy DOES move up and down, but we have never seen it bottom out (and if it did - well, you'd have much bigger concerns than your investment).

By selecting a diversified portfolio, such as a mutual fund, you can usually base your prediction on past activity and you'll see that in any 7-15 year period the investor always came out with more than he put in.

How do you take advantage of that? When should you invest?

Well, if shares were being sold for $10 each and you had invested $100 you would have purchased 10 shares. Now, if that is your whole investment you would be very upset if the value went down to $5, wouldn't you? Now your stock is worth $50. What would you do? Sell before it goes lower and loose $50?

Using the 'Cost Averaging' technique:

Cost averaging means you continue to put the same amount of investment into the market regularly - preferably every month. Now if you did that you would have invested another $100. At $5 a share you would buy 20 shares. Right now you have invested $200 but only own $150 worth of shares.

What happens when the price goes up?

When the price goes back up (and it will) it may stop at $8 per share. Now what? Well, you invest your next $100 and buy 12 shares.

You now have 42 shares valued at $8 each. That totals $336. Your investment was $300 so you just made 12% off of your investment.

Combining the cost of averaging with the 10% recommended for us to set aside for savings or investment - what's stopping you from jumping in?

Furthermore, another strategy to smart investing would be to start with stock marketing investing using simulation games.

A stock market simulation game is a great way to practice your investment skills before actually investing any "real" money in the stock market.

Simulation games are usually played on the internet, where people can experience the thrill of investing in the stock market without any risks, costs or any fear of losing money when and if they make a poor investment decision.

Many teachers and professors of banking and finance are now using stock market simulation games to teach their students about the rudiments of investing in stocks. Most stock market simulation games come with a fee to get started, but there are some that are free of any charge. One does not need have prior knowledge about the stock market to join.

This is how stock market simulation games usually work:

First, players must register. After registration, players are given an initial sum of "virtual" money to invest in companies of their choice. Players build a portfolio of stocks by buying and selling shares in companies. Most stock market simulation games use real-time market data.

The objective of most stock market simulation games is simple:

To increase the value of your portfolio of stocks so that it is greater than that of the other game players.

Below are some tips on choosing a stock market simulation game:

Choose a stock market simulation game that is used and recommended by reputable colleges, high schools, middle school, investment clubs, brokers in training, corporate education courses and any other group of individuals studying markets in the U.S. and worldwide.
Choose a stock market simulation game that is comprehensive and easy to implement in any Finance, Economics, or Investments class. A good stock market simulation game should feature trading of stocks, options, futures, mutual funds, bonds from the U.S. and many of the world's major markets.
Choose a stock market simulation game that provides a valuable, reliable, and realistic trading simulation at a reasonable price to members and other individuals who are interested in learning more about investing and trading. The simulation game should also have some capability for testing a variety for investment strategies.
Choose a stock market simulation game that has a toll-free customer service phone number and excellent e-mail support for members. The support function should be able to quickly answer any questions that members/players may have.
Choose a stock market simulation game that is easy to use and easy to teach even to those who have never had any real hands-on investment experience.