Four essentials to consider before investing on the stock market

Investing in shares and making your money work harder for you is every investor’s dream. However, being successful in the stock market takes more than guesswork and a bit of luck. Here are four essentials our experts would suggest before you dive in.

1. Set some realistic goals

Before you grapple with share investments, it’s worth taking a look at your overall financial position. Set some short-term and long-term financial goals so that you have a clearer picture of how your investments in the stock market will support these objectives. Determining a time horizon will also ensure you’ve got a fixed point in the future to re-evaluate your investments, to check they’re aligning with your broader financial goals.

2. Calculate your risk

Any type of investment involves a level of risk, and there are never any guarantees when it comes to the stock market. Determining your risk tolerance will help you to know when the perceived risks of your share investments outweigh the potential benefits involved. Work with your financial advisor to calculate your personal Risk/ Reward ratio. This figure compares the expected returns of an investment with the amount of risk you’re taking on. Getting comfortable with this calculation, along with other key terms, is an important part of being an educated and empowered investor.


Once you’ve done your own homework, it’s time to turn your gaze to potential investments. Before investing in a company’s stocks, you should develop a thorough knowledge of how that company actually makes money. What is their core business? Do they offer products or services? How many countries do they operate in? Are they a recognised market leader? How many shares are on offer? Just like any other decision in life, it pays to do your research before making any serious commitments.

Remember to Diversify

Investing in a diverse range of market categories can help to spread your risk, and can protect against more sudden or severe losses. The old saying is true: Don’t put all your eggs in one basket. Success in the stock market won’t happen overnight, but with the right support and strategies in place, investing in shares can be an effective way to build wealth.


As always, if you’d like professional help in this area, book a chat with the Hatcher team.