How to Start Investing on the Stock Market in the 2020 Crash Now

A Quick-Start Guide to Stock Market Investing

Hello everyone, and welcome back to my investment series. I’m your host — Antoaneta, and today, we’ll be talking about the Stock Market in 2020. I took my first financial course in early 2015 when I became interested in trading. By 2017, however, I came to realise that this isn’t the thing for me — it was far too stressful, and it just wasn’t clicking with my personality. But I didn’t want to give up. I was still very passionate about finance, and I decided to try something else.

This was when I got into the Stock Market, and I’ve been an involved Stock Market investor ever since. I’ve received many questions, both from aspiring investors and from already established financial enthusiasts, with a couple of successful ventures under their belt. In all honesty, putting this piece together is long overdue, but I was busy with another, finance-related project, that I’ll tell you about later (stay tuned!).

But now, I don’t think that I can delay it any longer, especially given the COVID-19 situation and the current state of the market. A lot of people are worried about their financial stability for the upcoming months (or even years), and many more are looking at the Stock Market as a way to secure their “smooth sailing”. The financial questions that I’m getting are also coming in with increased frequency and intensity, and I believe that it’s about time I published this.

We’ll look at the following points:

  • What is a Stock?
  • How to invest: Logic Vs Emotion
  • The Investment Strategies
  • How to Buy Stocks?
  • Passive and Active Investing
  • Stock Research
  • How to Gather Information?
  • Annual and Quarterly Reports
  • Ratios and Metrics
  • How to read financial Statements?
  • Dividends
  • How much should a beginner invest?

Before we begin, I’d like to just throw in a quick Disclaimer here:

Please keep in mind that, as with all other information on my website, this article is based upon my personal experience and research. I am by no means a certified expert or your personal financial advisor. I would highly advise you to do your own research and consult with a certified professional before committing to serious investments, or other major, life-altering decisions.

And now, with all of this out of the way, let’s dive right in!

Stock Market Basics — What is a Stock

In plain and simple English, a Stock is a piece of a company. When you buy stock from a company, you’re essentially purchasing a piece, a share of that company. Each public company can list a certain percentage of its shares on the market, and investors can buy them. If you purchase a lot of stocks in a given company, you can find yourself owning a non-insignificant percentage of that business. Some companies will invite significant shareholders to meetings and conferences, and, depending on the circumstances, this might give them a voice in the future of the business.

How to Invest: Logic vs Emotion

While this is mostly directed at new and aspiring investors, it’s something that all of us, beginners and veterans alike, need to be careful with. Do not give in to hype, panic, influencers or marketing tactics. Always be calm and collected.

The Investment Strategies

  • Technical Analysis — a time-consuming strategy based on constant monitoring of stock charts.
  • Fundamental Analysis — a strategy, based on external events, trends and outside influences.
  • Passive Funds — a long-term strategy, based on market-weighted indexes and portfolios.
  • Behavioural Financial Strategy — an innovative strategy based on the behavioural finance approach.

How to Buy From The Stock Market

Passive and Active Investing

Active investing is for those with a lot of time on their hands. If you enjoy the intricacies of the financial market, then active investing might be a great past-time activity for you. With more spent on the market, you’ll also have more opportunities to learn new things and get up to speed faster.

Stock Research

Quantitative and Qualitative Research

  • Quantitative Research — The financial numbers, reports and performance speculations all fall into this category. This is where the majority of your time will be spent on. You’ll read Annual and Quarterly reports, metrics and statistics.
  • Qualitative research — you’re looking into the company’s mission, vision and values. Their culture and leadership. This helps you figure out more about the long-term future of the business, and allows you to see beyond what the numbers and statistics can tell you. Qualitative research also helps you spot potential problems, scandals and setbacks ahead of time.

Where to find information

  • The company’s website — Public companies will have dedicated website pages for investor relations, where you can read their respective reports.
  • Your Brokerage platform — Most of the big brokerage platforms offer a plethora of information to their clients, which is where you’ll be getting a decent amount of your data. Generally, they’ll have all of the reports and the majority of statistics freely accessible.

Annual and Quarterly Reports

  • Annual Reports (Form 10-K) — These come out around the end of the calendar year for most companies. Annual reports are generally very long, with some larger companies publishing well over 100 pages’ worth of data. Still, if you are serious about investing, I’d highly advise you to read the entire thing, cover-to-cover.
  • Quarterly Reports (Form 10-Q) –Much shorter than the 10-Ks, Quarterly reports are meant to give investors a quick, focused overview of a given period. Frequently, 10-Qs will reflectively reference 10-Ks, underlining projections and predictions. They are a great way to learn about what’s happening with the given company right now and are definitely worth the read.

Ratios and Metrics

  • Market Cap — The total valuation of the company. The market cap is calculated by multiplying the number of shares available for the company, by the stock price.
  • Beta — Indication for volatility. The average for this metric is 1, with lower values signifying lower volatility. Less volatile companies are less likely to rise or drop along with the market rapidly.
  • Earnings Date — This is when companies publish their Quarterly Earning Reports. A lot of these reports are public, and you can freely listen to them.
  • Volume — How much that stock is being traded.
  • Dividends — A certain small percentage of the company’s earnings can be paid out to shareholders, in the form of dividends. Some stocks will have much higher dividend ratios than others.

How to read financial Statements

  • Balance Sheets — Assets and liabilities.
  • Income Statements — Company revenue and income trends.
  • Cash flow Statements — Where the cash is coming from and where it’s going.

How much should a beginner invest

So, don’t rush. Don’t pour all of your savings into your very first investment. Instead, I’d advise you to keep saving money and get into the investing game by using about 10% to 15% of the funds that you’ve prepared for it. This way, even if you don’t make the best choices at first, you’ll be able to recover and keep working at it.

What comes next?

And would you look at that — it seems like we’re all out of space for today! And while I do realise this article is a tad longer than my usual posts, I believe that it’s well worth the read. As a matter of fact, I was planning on posting a much longer piece — there is plenty to talk about when it comes to Stock Market Investing. But this should be enough to help you get started in the wonderful world of finance.

If you enjoyed this article, and you’d like to learn more about the Stock Market, investing, financial independence, or success in general, have a look at the resource section down below.

As always, if you found this article useful, then please like it on Social Media and share it with your friends. And, if you have any questions, ideas or experiences, please let me know in the comment section down below — I always love hearing from you! You can also reach me via email, or on Social Media.

Thank you all for reading, and until next time:

Stay green and motivated!

© Lifestyle Tips by Antoaneta

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