Here’s how to start investing in shares for beginners seeking maximum gains with minimum risk

Looking for the best tips on how to start investing in shares for beginners for maximum returns? Look no further.

Early in their investing careers, many beginner investors have only a vague idea of the value of building an investment portfolio. Ideally, they would learn how to invest by making a lot of money in a few shrewd stock picks, then switch to a conservative, well-balanced portfolio.

However, if you are interested in how to start investing in shares for beginners for maximum gains with minimum risk, then our Successful Investor method can give you above-average results when you practice it on a consistent basis. And at the same time, if you think of and plan your investments as a portfolio, your investment results will become more consistent, less time-consuming, and more satisfying than ever before.


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Learn how to start investing in shares for beginners with these key tips

We continue to think investors will profit most—and with the least risk—by buying shares of well-established companies with strong business prospects and strong positions in healthy industries.

Investors learning how to find the right stocks should look to tap the long-term growth that inevitably comes to well-established companies when they operate in relatively free economies. Here are the most essential elements for learning how to start investing in stocks.

  • Think like a portfolio manager to find top stock picks
  • Resist the temptation to copy prominent investors
  • Use technical analysis as just one tool
  • Look beyond a company’s share price at its fundamentals
  • Focus on dividend-paying investments
  • Practice patience with your investments

Part of successfully learning how to start investing in shares for beginners is to avoid “market lore”

Like a lot of beginning investors, I once took an early interest in “market lore”—rules for making money in the stock market. These rules aim to tell you how to spot good stocks to buy, good times to buy or sell them, how much to pay, etc. Most of these have gone through periods of success, of course—they seemed to work, so they attracted a following. None worked consistently, however.

Market rules like these try to make sense of statistics that are subject to a large random influence. When they succeed, it reflects a series of coincidences. (One of our first principles on investing is that random events tend to occur in bunches.)

However, some rules are valuable because they help you recognize what’s going on with processes related to transactions and markets. The most consistently valuable rule I ever came across was the one about “spot the sucker.” If you’re a poker player, you may recognize it as an adaption of an old poker rule: “If you can’t spot the sucker after half an hour in a poker game, you should drop out, since the sucker is probably you.”

This rule won’t make money for you. But it can help you reduce the losses you inevitably suffer in the stock market. Controlling losses is a key part of success in many fields, poker and investing included.

In investing, the stock market takes the place of the sucker. The difference is that in poker, the sucker contributes his own money to the pot, to be distributed among the better players. In investing, the market plays the role of the sucker. The market feeds the pot by distributing the profits that public companies create over long periods in prosperous countries. These profits go to shareholders, although other participants—brokers, promoters and so on down the line get their cut first.

Two more tips on how to start investing in shares for beginners for the best returns

Lower-risk investments equate to safer investments. For conservative investing, focus on investing in high-quality stocks that offer hidden value.

Well-established companies are the key to profitable and lower-risk investments. That’s not to say that there won’t be surprises that affect every company in a particular industry. But well-established, safety-conscious stocks have the asset size and the financial clout—including sound balance sheets and strong cash flow—to weather market downturns or changing industry conditions.

Starting with our three-part Successful Investor approach is the best way to learn how to start investing in shares for beginners

You need to keep in mind that any long-term gain you make in the stock market comes from the profits of public companies you’ve invested in. We designed our three-pronged Successful Investor approach to tap into these profits. Here it is:

  1. Invest in high quality, mostly dividend-paying stocks;
  2. Diversify across most if not all of the five main economic sectors;
  3. When making investment decisions, resist getting sucked in to buying the “flavour-of-the-month” stocks, even if your friends and acquaintances, brokers and the media are in love with them. Instead, maintain a healthy sense of skepticism and avoid stocks in the broker/media limelight

Many investors have found our system does a good job for them, by helping them find the way to where the profits come from.

Many beginning investors turn to online trading. What kind of experiences have you had within this controversial form of investing?

What was the most difficult lesson you learned as a beginning investor?

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