What Do I Need to Know About Stock Markets Before Investing?

The stock market, when properly understood, can help you make a lot of money, but you can also lose a lot of your money if you are tempted to invest randomly without knowing the nitty-gritty of the market. If you don't do enough research, you'll end up raking in losses. That's the bad news.

The good news is that you can cut down the losses as well as the amount of research you need to do by looking at some key factors.

Research companies fully—what they do, what they sell, how profitable they are, where is the company based, research from A-Z.

You can tell the risk by just looking at their past stock prices, if the price chart is jumping up and down, rapidly and constantly, it's not safe. If it's raising slowly, with small dips, it is probably a better bet.

I usually search for companies that offer high dividend payouts, factored by their profits. Even though it is pricier, it's better in the long run.

If you’re not sure how you should be investing your money, index funds are usually a good option. You might not see the dramatic returns that investing in an individual stock will give you, but they are a much lower-risk investment.

Index funds usually have low fees, which can have a significant impact on your investment over the long term. They’re also a convenient investment since they match the market, reducing the need for research, studying, and guesswork when it comes to investing.