How to Invest

You've probobly been thinking about investing for a long time, but the whole idea of the stock market is a bit scary, especially with the recent talk about recession and the poor economic state of our Country. In this post, I will try to demystify the stock market.

Step One

The first step in learning how to invest is to know where to invest. This can be especially tricky in times when the stock market seems to be dropping out of sight. However, if you are a well learned and researched investor, you can beat the odds and create a nice return rate for yourself.


Step Two

The smartest way to invest in these economically challenged times are to continually add money to your investments and to hang in there for the long haul. If you don't need the money you are going to invest for atleast five years, you are relatively safe in the stock market. History suggests that in periods greater than five years you can expect a descent return rate. The longer you have to leave it alone, the better off you'll be.


Step Three

There are ways, however, to improve your rate of return, especially in near recession times. Look to invest in companies that have strong cash flow. These companies should be ones that are stable and have been around for a while. They should be companies you can depend on to be here in the next 5, 10, 20 years, when you need to cash in on your investment.

Step Four

Some industries that are likely to improve over the next decade are biotech, alternative fuel companies, and video game companies. Look towards these industries for your long term investing.

Tips and Warnings

• Do not buy all your stocks at once during times when prices are likely to fall even more
• Steadily add to your investments each month. This will give you more stocks for your money at the end of the year
  
• Read and learn as much as you can, but when it comes down to it, trust your own instinct.

How to make money during a recession

With so much talk about a slumping economy and a downsliding stock market it is hard to imagine grasping onto any hope of yielding a profit during these times. Here are some suggestions that may help you survive during an upcoming recession.

Many of the country's wealthiest entities made their money from snatching up bargained stocks and holding on to them when the market recovered. If you are able to leave your investmenst to grow over a 5 to 10 year period, it is pretty safe that you will earn a descent profit. You simply need to search for well established companies that are sure to be around and stable in the next 5 to 10 years. Think of companies such as Coca-Cola, General Electric, Proctor and Gamble, and the like. You want to pick companies with low debt, steady growth, and strong earnings. In order to pick the best stock from a list of strong companies, pick the one that is farthest from its 52 week high. This is called Value Investing.

Do not use all of your investing money to buy up as many shares as you can at once. Break up your purchasing throughout the year. In a recession, stocks are likely to continue decreasing in price. By the end of the year, you will have more stocks for your money than if you would have purchased them all at once.

Next, look towards industries that thrive no matter how the economy is doing. People always need to eat. People always need household supplies, even if they aren't spending as much on them. They always need utilities. Invest in these companies.

Another way to make money during a recession is to buy under priced stocks of a company that is estimated to thrive during a recession. These will be companies that provide a product or service that is "needed" rather than "wanted". Also, since people spend less money during a recession and usually hesitate to put out cash for large luxury items, they will more than likely spend on accessories for the items they already have. This can include video games, digital camera components, mp3 player accessories, etc. Look to invest in these types of companies.