How To Make Money On The Stock Market
Cash On Standby Rules The Stock Market
You might be invested in a nice growth stock that will ultimately make you pots of money. And good for you for being lucky or wise enough to happen upon such a beauty of a stock. Oh what’s that, you are invested in a number of growth stocks I hear you shout?
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Well, well, tell me more. Clever you for spotting the next amazon. But, in reality of this fast everything world, how many of us are going to wait around 20+ years before we cash out all those millions so that we can enjoy the profits?
The thing is, those in the 20s who buy stock, trade stocks are looking for quick returns in the stock market. The young generation don’t want to dump a ton of cash on a selection of stocks and forget about them hoping that all turns out well.
Those in their twenties, are looking to join a pump and make a few bucks dumping before the spike turns into a flop as everyone hits that sell button. Most of the pump and dump stocks are risky in that it’s unclear if those stocks can stay the course after they crash.
Some stocks do regain momentum overtime, when the stock sector they are in finds favour once again. Cannabis stocks where all the range a few months back. Then they were dumped in favour of new blood, oil and minding stocks to name but a few stock sectors.
No doubt those slow to sell and or who got in late to the party, and bough into the spikes, may have dumped their shares at a loss. And no doubt a few months later, or half a year or 18 months, will kick themselves when they find out those stocks rose once more and some maybe even reached new highs.
This is the thing. It’s not always a good idea to sell at a loss, and I really don’t understand why people do. Well, part of me does, really, on the other hand, it’s because they want to feel the power of the ready cash on standby to join the next pump, hopefully catching one or more early enough to make a healthy profit.
This is why stock investors are well into Reddit, Twitter, StockTwits etc, so as to keep up with what stocks are trending. The problem is, selling at a loss weakens the stock investor’s bankroll and more losses than gains is going to end in failure.
The solution is to split the stock investor’s bankroll into portions of invested funds into a few stocks. And having cash on standby ready to buy the dips, or buy the crash, buy value, buy low, pre hype, so that profits can be made.
In this way stocks that are taking time to come good, to recover, can get on and do their thing, without the investor worrying that their money is tied up and worse that the value of their money is falling as the shares in the stock or stocks they invested in fall.
This is why it’s important to go all in, so that your money, your cash on standby put into action at the right time, will rule the stock market. The best way to store your cash is in a bank savings account earning interest while you wait for the right time to withdraw it, transfer your money into your stock trading broker account.
Open a bank or savings account that gives you flexibility to withdraw and re deposit funds without losing the interest. Because when you put the money to work buying and selling stocks you will want to withdraw the funds from your stocks trading broker account back into your bank account. Then you can wait for the next perfect or near perfect opportunity.
And don’t withdraw all of your money from your bank savings account, keep there a minimum that will go on to earn from the rising interest rates.
Another aspect of trading and investing you should think about is buying more dividend paying stocks when the share prices are low. In this way you gain value of a lower share price plus the dividends which should currently be paying more than bank savings accounts do.
For example, the average good dividend playout is 5% which is the equivalent to annual stock market gains when factoring combined dividends investing in say tracker funds.
Whereas the average 2,3+ years bank savings account is 1-2% if you’re lucky, moreover if you want accounts with flexibility without penalty of losing some or all of that interest.
Even if you’re a pump and dump gravy train hunter, given you’ll probably get hooked and be in the game for the long-term, as you get older, it’s wise to hedge your trading portfolio, by steering some funds into long-term value gainers and dividend profit making investments. You could reinvest those earned dividends into the same or other stocks.
Check if your broker charges to reinvest dividends into buying more shares the dividends were made from. If they don’t on an automatic reinvest option then I’d take this option to avoid the buy fee. But for long-term investing, this is where you’ll want to keep most of your invested bankroll.
So bear in mind, you’re going to need to always have cash on standby to buy the pump and dump opportunities, those penny stocks we all love. And to buy the dip and the stock crashes of your long-term invested stocks that earn you dividends.
If you have an income from a job or other source of income, then you are in a better position, because you can top up your cash savings first. Your cash savings should be looking more powerful than most of your portfolio, saving for the Amazon type stocks you might be lucky or clever enough to buy when those stock are cheap and can watch growing over the years.
Excluding those successful growth stocks, for every $1 you have on standby to invest in a pump and dump trade you should have invested in long term stocks, $3 and should have at least $4 in cash on standby to top up on both different styles of investing trades; the short and long-term situations.
After every 5 years you should sell cash values of your growth stocks to use to buy further potential growth stocks and or when the stock market crashes following major or minor crashes and dips. Be ready with cash on standby to load up on those value stocks that should recover soon after the fear has been forgotten.
Cash on standby rules the stock market. Invest wisely and make money with money. Buy at the right times, and sell at the right times and you should make money and more money. And as you do you’ll benefit from the higher dividends and the dividends earned on reinvested dividends.
All that compounding interest will make you a lot richer and a lot happier as you move away from the hype of the crowds frantic endeavours of trying to get rich quick on the stock market without really knowing what on earth they are doing. Make sure you invest using a strategy.
You’re welcome to take elements from the information in this article and tweak your own investing strategy.
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