The world of investing in stocks can be daunting at first glance. But the world of investing is not quite as hard to get into as it might seem.
“There seems to be some perverse human characteristic that likes to make easy things difficult.” – Warren Buffett
The good news is that due to advances in technology it’s easier than ever today to get set up and investing. Whether you are saving for retirement or to take a nice vacation, we can help you learn the ropes of investing in stocks. Check out our guide below and learn how to get started in the stock market!
1. What’s Your Style?
Before you can get started, you’ll have to decide whether you want a more hands-on experience, or prefer to have things managed for you.
For the hands-on type, choosing to self-manage may be the way to go. This involves a little more effort on your part but gives you more control.
For those who would rather “set it and forget it”, a robo-advisor may be for you. These low-cost services manage your investments for you so you can devote time to other things.
After you’ve given your investment style some thought, you a ready to open an account.
2. Open an Account
This is your gateway to the world of investing in stocks. If you already have a 401k account, you may be a little familiar with these types of accounts, though 401k accounts are usually limited to a number of mutual funds rather than individual stocks.
For those going the self-managing route, you will want to open a brokerage account. You can open either an Individual Retirement Account (IRA) or a taxable brokerage account. You will want to research specifics like commissions and fees to make sure the broker and type of account you select best matches your needs.
For those who choose robo-advisor, you will open an account with the vendor of your choice and then you will be guided through a list of questions that will help determine your investing goals. Then, armed with your desires in mind, the service will work to manage your investments from there.
Once your account is open you’ll have the option to invest in individual stocks, mutual funds, or a mix of both. Mutual funds give you the option to purchase small amounts of many different stocks at once, helping to provide a potentially less volatile investing option. Index Funds and ETFs are good examples of these and are generally safe and wise beginning investments.
Individual stocks allow you infinite customization. If you are a fan of a specific company, you can buy single or multiple shares in that company to get started.
Keep in mind that you will want a diverse portfolio to ‘hedge your bets’ so you don’t lose it all when one company’s stock happens to drop. This can require more work than mutual funds but offers you the most control.
3. Set a Budget
Next, you’ll have to decide how much money to commit to your investment. It’s best to start small while you learn the ropes. Many mutual funds have a minimum of $1000.00, so you’ll need at least that much to go that route.
For individual stocks, it will depend on the price of shares for that stock. Prices can range anywhere from a few dollars to a few thousand dollars.
Once you’ve figured out your budget, it’s time to pull the trigger and start investing!
Execute your budget and purchase some funds. Keep track of things and learn from mistakes. Learn to research stocks and work towards a goal.
The most important thing is to get started in the stock market today! You’ll never make money without making the investment!
Learning How to Get Started in the Stock Market Is Easy!
And there you have it, now you know how to get started in the stock market! Who knew that taking your first steps towards investing in stocks could be so easy! If you’re hungry for more great finance tips, we’ve got plenty more, just click on through!