There are two basic approaches to deciding if an investment is sound. These styles are sometimes referred to as ‘technical analysis’ and ‘fundamental analysis’. It is worth reflecting on your own personal style to find which best sits with you. Technical analysis of stocks involves careful investigation of the price fluctuations of a stock, to decide whether it is likely to increase in value. Technical analysts are more likely to make decisions based purely on trends in statistics.

Fundamental analysts however, will learn about the company, reading the annual report and news reports, and considering the bigger picture – does the company produce a product or service that is likely to become more valuable, for example?

Whichever camp you fall into (and there is no reason to be solely one or the other), there are a few basic investment tips that will help you make money in the long run.

• Start investing now! By setting aside a small amount of your regular paycheck, you will soon have enough to buy a small amount of a stock. While you save, start researching your choices using one or both of the methods that we have discussed. With online brokerage fees becoming very low, it can be cost effective to invest in as little as a few hundred dollars worth of a stock. The experience you get will be critical in helping you make good decisions down the track, with larger amounts of money.
• Manage your money. You will be able to put aside more to grow your stocks quickly if you cut out unnecessary expenses. Try eating at home instead of going out, or catching the bus a few times a week if you normally drive. Any money you save will come back many times over in the long run, if invested wisely.
• Invest for the long term. While there are people who can profitably buy and sell stocks in a single day, for the average investor the best way to show a return is to buy a stock and hold it as the company grows. You will need a lot of market knowledge (or luck) if you are to make good short term gains.

Long term investing in the stock market has proven to be one of the most reliable ways of making money. As long as you are prepared to weather market fluctuations, and continue to educate yourself about investment strategies, it is possible to make a return on your investments far above simply keeping your savings in a bank account or term deposit.