Low Interest Rates Means More People Buy Stocks

One effect that low interest rates has is that it makes more people interested in learning how to buy stocks. With interest rates hovering around just under 1%, it is impossible to make any money by putting your money CD’s or Treasury bills. The stock market is the natural place for people to go to try to get a better return.

Interest rates have been low now for several years and during those years the stock market has gone up quite steadily. There might not be a direct correlation between the two but there is no doubt that low rates push people toward stocks.

Anyone who is a beginner investor and looking at buying stocks for the first time would do well to buy a one of the Stock Market For Dummies type of books that you can easily buy online. They come in paperback form and are quite inexpensive and definitely worth the price for the information they provide.

Beginner investors should understand as much about the stock market as they can before they put their money into any stocks. Most important of all is to understand the risk they are accepting by buying stocks. If you come from a background where you made all your money from interest income, you need to know that the money you put in stocks is not guaranteed by the FDIC like you might be used to.

Other things to learn and understand is why the market goes up one day and down the next. Sometimes it is hard for first time investors to come home from a hard day at work and realize that they lost more in the market than they made at work. Of course it can happen the other way were they make money as well but it is the down days that are the hardest to get used to.

Investors in stocks that are just starting out need to learn how to separate in their minds the money they have in stocks from the rest of their money and not let big losses or gains get to them. It is something that can take a while to learn and some find out that they worry too much and that stock investing is not a good choice for them.