Every successful trader had to begin somewhere.

My father enjoys dabbling in the stock market now and then, often describing it as “gambling for intelligent individuals.” While that may be amusing, starting out as an investor is not as daunting as it may seem, particularly in today’s world. While being knowledgeable is crucial, becoming a day trader overnight is unrealistic. However, with some effort and basic calculations, anyone can earn some profit in the stock market. Here are some key pointers to help you kickstart your journey.

First and foremost, diversification is key. This is not just a cliché thrown around by investors; putting all your money into a single company is akin to betting everything on one card. While you may stand to gain significantly if things go well, the economy seldom works in such a favorable manner. Rather than investing your entire budget in one stock, spread it across 10-15 different stocks. You may not reap huge rewards from a single stock performing well, but in case one stock nosedives, the impact on your finances will be limited, and you will have other investments to rely on. Avoid spreading yourself too thin as keeping up with updates on numerous companies can be overwhelming.

Secondly, consider index funds. Stock indexes such as Nasdaq or S&P 500 closely monitor the market’s performance. If the market is thriving, index funds will yield returns, albeit in modest, consistent amounts. Investing in index funds is akin to playing penny slots; you may not make significant gains, but the chances of success are higher, and with persistence, you could accumulate a substantial profit over time.

Lastly, let’s talk about patience. Investing is a slow but rewarding process. If an individual bought Amazon shares in the 1990s and sold them a month later, the returns would have been minimal. However, had he held onto them for a couple of decades, he could have achieved a fortune akin to Jeff Bezos. Stocks require attentive monitoring and nurturing over prolonged periods before significant returns materialize. By exercising patience and eliminating underperforming stocks from your portfolio, you could find yourself with a substantial nest egg in the future.