When To Buy Stocks For Beginners

Having knowledge of timing around when to buy stocks for beginners can be crucial to getting a good foothold in this entire undertaking.

Here is a terrific review method before buying stock.

Here is a review of some thinking the famous investor Warren Buffett had. Basically, buying stock because you think it will increase in price is dumb. Instead, buy stock because you believe in the company.

That’s it basically. This doesn’t mean going all-in on a failing company simply because you’re a believer or like the company tremendously. It just means not to place value in making a quick buck so much, or not even understanding what you’re investing in. You see, long-term is the way if you really believe the company will be successful and have done thorough research beforehand.

This is a good principle for adherence to. Buy because you believe in the company, not because it’s going up in price.

That being stated, when to buy stock can be crucially important. There are several ways of thinking that may be correct before placing your order for shares of a particular stock you’re interested in buying.

So let’s go in depth some and look at some revealing answers.

Is It Good To Invest In Stocks Right Now?

Before actually buying, this question needs to be posed. Is it right to invest in the current stock market condition?

If stocks are at all-time highs, maybe not. If they have fallen to extreme lows, then probably invest. Here are several ways of determining when to buy stocks as a budding investor.

1. Buy Knowing The Business

Don’t buy things blind. Would you buy an ice cream gallon without even checking the flavor? How about a $20 theatre outing without knowing anything about the film, even without knowing the topical genre it was involved with? What about a cheap set of pens without knowing if they had red, black or purple ink?

How much more thinking then, should go into buying shares for $5, $20, or even more money? And what of buying several shares of some company one doesn’t even have time to think about?

Another way of thinking. A movie ticket, set of pens, or bucket of ice cream only last so long, and the money “invested” into them never return. Stock share prices can drop some, but they can remain flat or rise in value. You could sell out and get your money back in full or sell shares at a decent 10% or more in profit.

So then, company shares can be greatly more beneficial than buying products, when it comes to bringing money back or even remaining at break-even price.

Knowledge is power, the power to make an informed decision.

Having knowledge concerning the business shares you want to buy is a great beginning point. Don’t just gamble with money here.

Read. Listen. View. Choose a method of instruction comfortable with. Then go forth and get the company details. Some natural questions could include…

Does the company have a valuable product or service?

Where has the company come from and how long have they been around?

Where does the company seem to be going in the next few months or years?

Is the company aligned with concepts like team, direction, or purposeful vision?

One doesn’t need to be an absolute expert in discernment here. Just having a grasp of some basic questions you may want answered can go a long way. Learning to approach stock shares with fundamental thinking can save money and offer pain prevention that is not noticed right away.

This knowledge process is a kind of insurance against stupidity or buying dumb.

2. Buy When Stock Goes On Sale

Certain times and seasonal days of the year are great for buying certain products. Electronics go for great bargains during end of year sales, coats in the summer, swimwear in the winter, and so on. What you want is to snatch up deals in the market in just the same way.

Here’s a big difference. Seasonal sales can be timed. The market has various sale times, differing specific windows of opportunity unknown beforehand. It is in no way timed or controlled, like sales for products and services.

This difference makes it extremely difficult, if not downright impossible to know when a future sale on stock will occur.

So wait and be patient. When the whole market begins to fall, as with a correction or crash, this can be a great opportunistic window for buying. A crash is a massive drop in prices and a correction is a lesser one, maybe 10%-20% for example. A crash can wipe out 33% or maybe 50% of any particular stock’s price. These numbers are guidelines, not specific percentages.

In any case, it’s like buying clothing at 20% or 50% off! Now for the inverse relationship. You need to wait until recovery occurs in the market. Then you can gladly hold the stock at better value or sell for a nice profit.

Wait for that sale! If you could buy 10 shares of a $100 stock you like at a $85 value price, that’s $850 total instead of spending $1,000.

3. Buy When RSI Reading Looks Nice

Uh oh, a big term for a beginner. The RSI is the Relative Strength Index, an indicator of recent pricing within the stock.

Delving into this indicator is great for a beginner. Use this knowledge for your stock market endeavors. This can help with finding a correct buying price and saving money potentially.

An online brokerage will have this feature in their charting system. Not all brokerages, but many do. And it’s quite nice to have. Look at this before placing your money down to make an informed decision.

The RSI reading will go between 0 and 100 on the line graph.

So what is the RSI conventional understanding? That line readings below 30 mean the stock could be oversold or not taken too seriously. Also line readings above 70 mean it is overbought and should not be bought.

Obviously if it reads over 70 for the stock, wait on standby before buying. The price may likely fall and pullback from the current high. If it is below 30, consider strongly whether to place an order and snatch up the pricing deal.

Many factors can go into determining whether it’s a great time to buy stock, though the RSI indicator is very useful.

Having this one tool before buying is great. Having two or more tools can increase one’s chances of buying at the correct time.

4. Research Some Price Targets

This is doing some homework on what the analysts presume in their price targets. What date and price do they give to the certain security (stock)? Knowing this bit of information, one can pull together more knowledge regarding when to buy the stock as a beginner or advanced trader. The word “trader” here doesn’t mean you must buy and then need to sell at some point. You could “trade” money for the stock and hold to some unclear time of your choosing.

Knowing the price targets of analyst professionals into the near future can assist when trying to make a decision about what the stock is really worth overall. For example, if the stock’s price is currently way over any analyst’s prediction, you may not want to buy too quickly, and instead wait for a discount instead. Alternatively, if analysts value the stock way over the current price, it may be a great time to buy.

5. Buy After Chart Research

This doesn’t mean complexity. Just take a simple glance at the recent history.

Look at the past week and month. What are the lows and highs of the stock? Does it make sense to try and wait for the lows to return?

Try and time things somewhat. How about a range of what pricing is close to the lows of the past week, month, or even 3 months? If you decide upon an approximate low range of buying, that could mean getting close to perfection. Just try and not set a perfect buy-in price since that may not take place whatsoever.

Setting a manual price involves deduction. Just looking at the recent past can assist greatly before buying stock blindly. So this is another general tool to be aware of in one’s buying toolkit.

Being aware of the more high prices can help to steer clear away from them, no matter what time or day of the week stock is bought. Having one’s own low targets can help tremendously with confidence in making a cognizant and informed decision.

Before buying any stock, it may help to review the prior five points again. This process of looking at things before buying can be very important to understand.

Stock Market Timing

Timing The Market vs Time In The Market

What are the best times to buy stock? How about the best days to buy stock?

It is likely far better to grasp the five key points this post began with, than to rely on times and days. Yes there are some beneficial times. These can change though and are hard to gauge accurately sometimes.

It is better to grasp the fundamental key of buying when the stock is within your predetermined low buy-range, or when the market fails in a big downturn for example.

If the reader needs lesser points, then yes, certain times of the day may be better for buying. These may be during the midday or closing hours, when things could settle down. During the opening hours though, many times the prices increase as there is major buying activity already.

Remember this. One should want to buy when prices are decreased and lower, not necessarily with major buying activity that has prices going sky high.

And so, timing the market can be very difficult. This is similar to gambling. But time in the market is different. It’s not gambling, at least not for the most part if buying things correctly, with purposeful study beforehand.

Spending time in the market allows the investment to both fall and rise in value over years of time. And hopefully, it ends up in positive territory. Stable companies usually do.

Spending time timing the market may lead to disappointment, selling off at wrong times, buying for a loss, and other negative occurrences.

Timing The Market vs Buy And Hold

The buy and hold method is the same as stating “time in the market” in another way. Leaving stable company stock shares alone for years will usually lead to profit over that period.

Putting $10,000 into an index fund left alone for 20 years, with annual returns of 8% average, some years up and some years down, leads to $46,609 after these 20 years. And that’s with a one-time investment!

For a retirement account, one could even begin at age 45 and at 65 years old have a nice sum of retirement money.

Incidentally, that same $10k equals $100,625 after 30 years. Further, the same $10k equals $217,250 after 40 years. These are tremendous gains over time.

It cannot be overstated enough here. Buy and hold beats stock market timing, for the vast majority of investors. Only a select small group of individuals is able to day trade stocks successfully. If you just want to park money and have it grow over time, a single retirement account would probably be effective here.

Have two accounts if you trade stocks frequently. That’s the firm advice here. So if one were to day trade, a secondary approach of having a stable long-term investment should be there under some other account. That’s because the entire “trading investment” alternate account could be lost from making ill-timed decisions, emotional downs, foolish miscalculations and other sorts of whatever.

How Much Money Should A Beginner Invest For The First Time?

If you have $100 to spare, then don’t wait to begin. Why? The easy reason is that this move awakens the mind to another responsibility within life now. In other words, once you understand to take this seriously, investing again in the future becomes easier.

And to take this move seriously from the get-go, have the correct mindset. This money fund should likely not be touched for bills, expenses, or even emergencies if you can help it.

Be disciplined. Think of it as non-existent money, not to be withdrawn from. This advice can form the habit of making your investing journey a serious one. You see, if you don’t care about withdrawing money and take this thing casually, you could set yourself up for failure. In particular, the failure from missing potential future gains. And that’s a serious thing, particularly when missing out on potentially thousands of dollars.

This question of “how much to begin investing with” is better answered by redirecting the question itself, to one involving the appropriate mindset.

Be focused and disciplined. If you absolutely need money, take on part-time work, mowing lawns, begging on street corners, almost anything other than touching a potential retirement fund.

You could end up thanking yourself later for not taking a more easy way.

This covers mindset. Let’s answer the monetary question next. How much money should a beginner begin investing with? This really just depends on the individual.

One Can Begin Investing With A Small Amount

If you have $1,000 spare cash, then that’s a great beginning. With a lesser amount of $500, it’s a great day to begin. With $5 on-hand, this too is a beginning.

Even a five-dollar bill is a beginning. Remember the concept of beginning with the correct outlook. Even five dollars can go a long way if you are attuned to making saving money within the stock market an ongoing habit.

When to buy stocks for beginners? When you’ve a bit of money, any specific time becomes a personal decision.

Try not to be dissuaded that a small beginning doesn’t mean much of anything. The over-powering discipline to continue the habit is what can make all the difference. Today, five dollars. Tomorrow, a hundred dollars can be deposited.

The more invested over time, the better than compound interest is allowed to work in favor of the investor.

What stock do you want to invest in? If it costs more than $5 and that’s what you have to begin with, consider a fractional share. This is just a fraction of one share, which could mean 1% of a $300 stock for example. A $3 buy here would work, if the stock you want is too expensive currently. Then you could buy the other 99% of the single share later on.

This is a pretty nice modern solution for not having enough money to buy a particular stock share. Some brokerages offer this feature.

Don’t buy stock until ready. One could also save the $5 until having at least enough to buy one complete share. A brokerage may allow parking the money into their cash equivalent. It may be preferred that one is not forced to buy stock until ready. So allowing money to be stashed is a nice feature a brokerage may offer.

If you go with a brokerage that doesn’t allow money to be parked freely, you could just place money in a cookie jar, another container, or even a bank savings account. Wait to have enough and then deposit into a brokerage when your ready.