It’s a zero-sum game, with participants competing neck-and-neck against one another.

Unfortunately, there tend to be more losers than winners, as the winnings skew favourably towards the big and established investors, leaving new and greenhorn investors worse off from when they started.

Whether you have some experience on your hands or are new to stock investing yourself, you’ll still be under equal conditions as everyone else. So don’t be disheartened.

If the competitive and hungry spirit to build wealth is strong within you, then you should be proactive in planning and executing a sound stock investing approach.

Ready to build your wealth? Here are seven helpful tips for successfully investing in the stock market.

#1 – Develop a Personal Investment Strategy

Let’s face it, everyone has different financial circumstances and goals. While listening to the investing advice of a CEO is well and dandy (and can work on the right person), it’s not a cookie-cutter solution for everyone’s investment needs.

Instead, deeply get to the bottom of what your investment goals are. Why are you building your wealth? For whom and for how long?

From there, think of what steps you can take to achieve said goals.

One category to think about when planning your investment strategy is your risk profile. Do you want to make big bucks fast and are willing to take moderate risks? Then you can consider taking up an aggressive investment profile.

Conversely, if you want to build your wealth slowly and steadily, then you’re someone who’ll benefit from taking up a conservative investment profile. These investors are willing to invest money in blue-chip stocks in established industries, like healthcare and FMCG.

That said, be sure to adjust your investing style according to your financial situation. From a salary increase to an emergency, plenty of outside variables can make a realignment of your strategy a worthwhile endeavour.

#2 – Study Stock Investing Terminology and Processes

The world of stock investing can be a confusing place. From constantly moving graphs and numbers to dozens of jargon mashed together into sentences, it’s understandable for newcomers to feel overwhelmed by it all. 

That said, no one’s born an expert at much of anything—most especially the stock market. The people who are now experts in this craft were once inexperienced in this field too. Mastering this language is achievable, with the right approach and guidance.

If you’re completely new to this, start with the basics. 

Know the difference between stocks, bonds, and ETFs. Then, learn about the different numerical indicators in the stock chart. Then, start acquiring more relevant information about investing, like technical analysis terms, financial ratios, and market capitalisation.

Once you’ve developed a solid background of stock-related vocabulary, you can more quickly follow the procedures and teachings of investors and other financial-savvy people. 

This can exponentially hasten your acquisition of knowledge, which can ultimately make you a better buyer and seller of stocks.

#3 – Put in Money

Studying theory is nice and all, but the prerequisite for you to succeed in the stock market is putting capital into the market.

If you don’t have a solid approach yet, consider allocating a certain percentage of your monthly income to your investments. This can be a small amount of just about 10% to start to help you dip your toes into the field.

Doing this helps solidify your commitment to building wealth while simultaneously familiarising you with the market’s fluctuating nature. It also helps you learn how to navigate your chosen stock exchange platform and further optimise your investment management skills.

If you don’t have capital yet, consider using stock investment simulation tools to start. These tools help make you feel like you’re directly involved in the stock market without actually tying in your money. 

Of course, you’re not going to be rich with this technique, but it’ll help give you an idea of what to expect.

#4 – Consider Putting Money in Index Funds

If you don’t like to track the Macquarie share price with HALO Technologies or other individual stocks, then consider putting your money in an index fund instead, particularly an established market index like the ASX 200.

This fund mirrors the market movements of the top 200 stocks in the Australian market, which helps diversify your exposure to the market and helps keep you maintain a solid portfolio overall, granted that the economy is performing well.

This approach can be enticing for people who don’t want to spend too much time analysing individual stock movements. Furthermore, this approach also helps promote steady growth since there’s no risk of one bad-performing stock pulling your entire stock portfolio’s value down.

If your goal is steady growth over the years, then putting some stake into index funds can be an excellent strategy.

#5 – Don’t Pull Losses Out Immediately

Market volatility is quite common in the investment world. Even the savviest investors can find themselves knee-deep in the red with a wrong stock choice, even if their analysis seemed sound even in hindsight.

That said, it’s important not to panic at the first sign of a downturn. Stock recoveries are possible over time, and this is especially true if you’re investing in a market fund like the ASX 200 or S&P 500.

It’s important to stay with your stock throughout its gains and losses. You’ll not always ride the wave of profits in the stock investment world.

That said, putting safeguards in place is also a worthwhile endeavour. Consider setting stop-loss orders when the time comes that your stock’s value drops below the point of no return.

#6 – Diversify Your Portfolio

Investing in just a single stock leaves you at the mercy of one badly-received company decision or a newly enacted law that doesn’t favour your company.

To remove this inherent risk, it’s important to keep a diverse set of investments in your portfolio. Diversification can significantly reduce your risk by spreading your investments across various sectors, industries, and stock exchanges. 

This strategy helps mitigate the impact of a stock’s poor performance in your portfolio, helping improve your portfolio’s resiliency to withstand market volatility.

To paint an example, consider diversifying across industries that don’t have a direct crossover, like the healthcare and technology industries. This helps remove the vulnerability of an entire industry collapsing and affecting your stock portfolio value.

You can also consider diversifying to different exchanges, like one in Europe and one in the US. This way, you won’t subject yourself to poor outcomes in geopolitical tension in a specific country, which can affect businesses and investor decisions.

By diversifying, you can create more opportunities for yourself to withstand economic downturns, which can be more attractive than simply reaching for the highest ceiling at all times.

#7 – Be Consistent When Investing

Consistency is key to fruitful investing. If you want to grow wealth, then you have to maintain a sense of discipline when making investments. One way to do that is by dollar-cost averaging.

This process involves investing a fixed amount of money per month (or at regular intervals). This smooths out the average purchase price of your investment, which can help in reducing the variability of your investment timings.

The key here is to consistently time your investment approaches. You can consider putting a fixed portion of your monthly income into your stock portfolio after every payday. 

Or, if permissible, you can talk to your bank or employer about putting a set investment into a fund for you automatically.