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Alternative Energy Investments presents - How to Go About Investing in the Stock Market

Here on Alternative Energy Investments we are pleased to present you with articles from our guest writers on a wide variety of alternative energy topics. We hope you enjoy this one:

How to Go About Investing in the Stock Market
By Geoff Cummings

Although many people have been burnt by the recent falls in stocks, some are perhaps wondering whether the stock market has gone as far as it is likely to, and if now is the time to consider making investments.

For those new to the market, getting hold of a good broker is important. There are various forms of brokerage, offering differing levels of service (and with differing charges of course). Going on the London Stock Exchange website is one way of finding the type of broker service you require.

Here are the more common types of services.

Execution only where brokers solely buy or sell shares according to your instructions. They offer no advice on how good/bad the shares are.

Advisory brokers provide advice and also execute the buy/sell decisions you make.

Discretionary brokers will buy and sell shares on your behalf. They will also have your authority to make investment decisions without your prior approval.

Nowadays a lot of investors use online services. This avoids having to phone to give your broker instructions. They are relatively quick, and simple to use.

For those new to buying stocks and shares, it`s a wise move to pretend to play the market. This means picking out those stocks you think will do well, without actually buying any. Follow how well, or badly they perform over a period of time. If you do this, and lose money, then you could try the same thing again. If you lose money more often than you win, then the stock market might not be for you.

Remember too that often even for the most basic investments there is a fee, often a flat rate of say £10, plus a small percentage on stamp duty. Small investments are usually not worth doing, simply because any potential profits can be more than eaten up with the commission on the buying and selling of the shares.

On the other hand of course, you could enter the stock market by letting others make your decisions for you. This would be through the medium of Unit Trusts, or, Investment Trusts. Although you have to pay a small amount in commissions and charges for them to do the work for you, there`s often less risk involved, as shares are spread over a number of companies, or sectors etc, and the company doing the trading employs professionals whose sole job is to make a profit, one hopes.

Final pieces of advice, which I`m sure you`ll have heard before, but is worth repeating. If you can`t afford to lose the money then don`t invest it in the stock market. There are some nice profits to be made, true, but the stock market is made of winners and losers. Also, if you need to lay your hands on your money quickly, again think twice before investing. The likelihood is that when you want your money out it will not be the best time to sell your stocks, as the stock market should be seen as medium to long term investments.

Geoff runs a money making tips blog as well as his site on discount DIY tools

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