How to Avoid Losing Money Investing | Stock Market for Beginners

In todays video we will cover 5 ways you can avoid losing money when investing in the stock market. These are things I wish someone had told me 10 years ago! It goes without saying that the stock market can obviously go up and down but hopefully these points help to minimise any potential losses when investing.

1. Don’t lose money unnecessarily through Tax.

If you are investing in the UK one of the most tax efficient way to invest is through an investment ISA or through your pension. If you invest in an Investment ISA or Stocks and Shares ISA you can invest £20k a year and any money you make through your investing will not be taxed.
2. Don’t day trade and instead invest for the long term.

When I normally mention to friends that I invest in the stock market they imagine I’m on the phone all day shouting ‘buy’ ‘sell’ or that I’m constant staring at two computer screens trading daily. For me this is not the case I do not trade regularly and certainly wouldn’t consider myself a day trader. I’m definitely more of a long term investor. Long term investing is definitely not as entertaining as day trading but you are more likely to lose money day trading. There are various studies on the percentage of day traders that lose money but the stats I have read vary between 70%-90% of day traders lose more money than they make.

3. Don’t buy hyped stocks

If you are hearing a lot about a specific stock or cryptocurrency is the news or on social media then there is potential that it may be overhyped and may be at the peak of its price and may fall considerably after you invest. Obviously this isn’t always the case and there are certainly exceptions to the rule but I would urge you to always do your own research as you never know if the person writing or talking about that specific stock, cryptocurrency, or investment has their own agenda. There’s a chance they could be being paid to write or talk about that investment. Please always do your own research before jumping on board with an investment that might be too good to be true.

4. Don’t lose money through high/needless fees

When you are choosing your investment platform make sure you throughly check their fees to ensure that you will not be losing a large proportion of your investment through fees. For the platform you should check for platform fees, dealing fees, and foreign exchange fees as well as withdrawal fees. When you’re choosing your specific investments you should check if they have ongoing charges, if stamp duty is payable and also if there’s any entrance of exit fees for a specific investment.
5. Don’t buy individual stocks

Some people are exceptional stock pickers, however, it’s very hard to beat the market when investing in individual stocks. I have a Trading 212 account where I invest a very small amount into individual stocks and luckily this portfolio did beat the market last year. However, I say luckily as a high proportion of the gains came down to investing in a single stock, which was Moderna, which went up over 400%. I invest small amount of money into individual stocks because I enjoy researching them and like the challenge it brings. However the likelihood is that investing in individual stocks is more likely to lose me money than investing in a basket of investments like an index fund or an ETF, which tracks the market or by investing in actively managed funds or trusts where an experienced fund manager managed the investments.

As always there may be exceptions to the above 5 rules, and this video is simply based on my opinion as a beginner investor.

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I make videos on investing, personal finance, growing wealth, financial independence, budgeting and saving money. Let me know in the comments what you’d like to see next!

DISCLAIMER

Any information given in this video is for entertainment purposes only, and does not act as legal or financial advice. Your financial decisions are your own responsibility, and if you do require advice please contact a qualified Financial Adviser or Financial Planner.

Видео How to Avoid Losing Money Investing | Stock Market for Beginners канала Your Money Mindset