If you are investing for the first time, there are a few things that you should consider before you execute your first trade. First of all, you need to take time into account. Investing in stocks is a long-term process if you plan on building a money-making portfolio. Your first investment should be in a stock that you can hold for five to 10 years.
Diversification is a critical factor if you are new to investing. A diversified portfolio is one in which you have invested your money in a wide spectrum of securities. A diversified portfolio may include 55 percent of your money in stocks, 30 percent in bonds and 15 percent in mutual funds. A diversified portfolio will help you build wealth over the long term.
You must consider the cost of your investments over the long term. A lifetime of investing can incur some heavy costs. Although a broker may only charge you 1 percent in commission for each trade, that 1 percent adds up, especially if you execute many trades over the course of your life. If you do not pay attention to your costs, it can cost you tens of thousands of dollars during your investment lifetime.