6 Tips for Successful Equity Investing and Navigating Through The Stock Market

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Investing in the equity market can be a powerful way to grow your wealth over time. But contrary to what some online guides may suggest, it's not as simple as logging onto a trading platform and diving in. The stock market is not a get-rich-quick scheme. If it were, the 60+ million Americans who own stock would already be multi-millionaires.

Instead, the equity market requires a solid understanding, careful planning, an academic approach and a healthy dose of patience. Investing, when done properly can become a significant part of your financial strategy, helping you steadily grow your money alongside other income streams.

Stock Market Basics

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Understanding the following basics is your first step toward becoming a successful investor. Make sure you get the concepts before you start. We always say an educated investor is most often a successful investor.

What is equity?

Equity represents ownership in a company. When you purchase equity, you're essentially buying a piece of that company’s assets and earning, making you a shareholder. The value of your equity can rise and fall based on how the company is doing and market conditions.

What are stocks?

Stocks, also known as shares, are the units of equity you can buy. Think of them like fractions. If a company has 100,000 shares, a single stock represents 1/100,000 of the ownership. Stocks are traded on the stock exchange, where buyers and sellers come together to negotiate its prices.

How do you trade stocks?

Trading stocks involves buying and selling shares on the stock exchange. You'll need to open a brokerage account with a financial institution or online trading platform to trade stocks. Once your account is set up, you can place orders to buy or sell stocks.

There are different types of orders, namely market orders, which execute trades immediately at the current price, and limit orders, which only execute when the stock reaches a specified price.

6 Beginner Tips for More Successful Equity Trading

Without the help of a personal financial advisor, the stock market can seem fraught with risk. Here are a few tips on where to look as you construct a portfolio:

• Competitive returns – That is to say, of course an intelligent and academic portfolio should be engineered to generate a strong return. Of course equities are a big part of most portfolios.
• Risk Management – While we certainly focus on rate of return, we are not blindly interested in returns alone. We are committed to generating vivacious returns, but we are also committed to taking on no more risk than is needed. Being clear on that is a huge part of getting clear on what equities you should own.
• Diversification – This one may land with you as a basic concept, but there is nothing casual or elementary on this point. It may be one of the most important topics rendered. Why? Because being properly diversified helps to generate and create competitive returns, control risk, and temper volatility. Your advisor or investment philosophy should have controls that incorporate this data. In other words, if you have no idea how to create a portfolio with any of this, you have a huge problem. Each of those elements is imperative in an intelligent and lucrative investment philosophy, in our opinion!
• Tax Sensitivity – High-income earners pay too much in taxes. Period! Way. Too. Much! An intelligent investment methodology needs to pay close attention to tax implications! Everything around your money should be carefully and methodically examined and planned around to reduce one's tax bill. It makes no sense to be taking on high(er) levels of risk, generating a competitive return and then surrendering significant amounts to taxes!

In our experience many professionals struggle with this concept and do not have enough strategy and focus on this point. If many professionals are not doing an excellent job at tax planning in their portfolios, how can you expect to create excellence in this space managing your own money?

• Accumulating, Preservation, and Spending Down Your Money– You need an intelligent methodology that gets you up the mountain, a philosophy to keep you on top of the mountain and to help you get down the mountain. Very few people managing their own money are taking advantage of all of the ways this is done prudently. Just spending your money without any real strategy or the inability to account for bear markets as you spend your money (as you come down the mountain) has a huge impact on your results. There is sequence of return risk without careful planning and it is rarely properly accounted for in professional financial planning; the odds of you doing this well, yourself, is rather slim, in our experience.
• Cost – In life, often the more we spend the better, higher quality/outcomes we involve ourselves with. A home, a car, shoes, clothes, phones, jewelry, hotels, flights, etc. The more we spend, the better the product, usually. There are few places where this is not true – one place it is not true is investments. There is no correlation with high costs and high(er) outcomes in our investments. Jack Bogle said it best, ““Lower costs are the handmaiden of higher returns.” Controlling costs is imperative to a successful outcome. Do you know what your investment costs are?

Patience Pays Dividends

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Investing in stocks/equities can be an excellent way to build and secure your wealth. However,  it's essential to approach it carefully. There are ways to invest in financial markets and do very well for yourself. There are ways to erode your wealth with foolish investments.

Allow me to give you an example of excellence. Morningstar rates each State’s 529 college savings plan each year. Each year Morningstar rates them. In 2024, as an example, two plans were  rated Gold out of 54. The rest of the plans took a lower rating.

What makes Utah’s 529 plan worthy of a gold rating for 13 consecutive years? If you plan on investing in financial markets it may be worth digging for the answer yourself; in lies the gold. (Literally)

The takeaway is there is a way to invest prudently, and a way to invest foolishly. Tencap is proud of our investment philosophy and we love to coach each of our clients on how we manage money, and more importantly, why we manage money the way we do.

Investors are interested in excellent outcomes. Excellent outcomes are only possible with highly academic and intelligent investment philosophy.

As you consider what you are left with as you finish this article, we hope you will consider that Tencap has been leading our clients to and through retirement for a very long time. We love the investment landscape and we are prepared to teach and coach you on how best to build and secure your wealth and get to a place of financial independence.

Call today to schedule your no-cost financial review!

Disclaimer: The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Utah or where otherwise legally permitted. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or indication of future results. Moreover, this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. Purchases are subject to suitability. This requires a review of an investor’s objective, risk tolerance, and time horizons. Investing always involves risk and possible loss of capital.

About the author

Nick Carrigan

Nick trains and develops families in creating, maintaining, and growing wealth. This includes educating clients on the science and academics of investing, comprehensive financial planning, and ongoing coaching to ensure discipline for a lifetime. Nick has seen this create incredible levels of freedom, fulfillment, and love for the families he works with.