Getting started investing in stocks

Getting Started

Step 1 - Educate

Educate educate educate... I cannot stress that enough. Educate yourself in what stocks are all about, learn the difference between what a bear market and a bull market is, and find a few reliable resources that you can rely on to give you tips, ideas, and research of their own when it comes to investing in the market. A great way to get started with your understanding of stocks is to check out the following links information that I have available on my site that you can utilize for some basic reasearch are:

  • Understanding Stocks

  • Bear & Bull Market Info


  • Step 2 - Open an investing account

    RobinHood Unless you want to hire an investor to manage your own money and invest it for you, to invest in stocks, you need an investment account. This usually means a brokerage account. An online brokerage account typically offers your quickest and least expensive path to buying stocks, funds and a variety of other investments.

    I have compiled a list of brokerage services that you can utilize, you can find this list by clicking here. However, I highly recommend Robinhood for new investors as it's very user friendly. For a more in depth broker, I recommend TD Ameritrade.


    Step#3: Learn the Difference between Individual Stocks and Stock Mutual Funds

    -Individual Stocks

    If you’re thinking about purchasing stocks from a particular company, you can buy a single share or multiple shares, to begin with, and build your diversified portfolio from there. A benefit of individual stocks is that a smart move may pay off handsomely. However, your chances are slim, considering that a single stock may not likely pay as much as an inherently diverse stock.

    -Stock Mutual Funds

    Budget

    Stock mutual funds are also known as equity mutual funds. These funds allow you to purchase smaller parts of various stocks through a single transaction.

    Exchange-traded funds and index funds are types of stock mutual funds that track an index. For example, the S&P 500 Index Fund invests in stocks from companies that encompass the S&P 500 Index. With stock mutual funds, you have the advantage of building a diverse portfolio, since investing in a fund allows you to claim ownership of small pieces of different companies.

    Step#4: Decide on a Budget For Your Investment

    As a novice investor, two factors you should focus on when deciding on a budget for your stock investment include:

    • How much money should you start with
    • How much money should you invest

    Typically, share prices range from a few dollars to thousands of dollars. If you have a smaller budget, though, and are interested in diversifying your portfolio, your best bet would be to invest in an exchange-traded fund (ETFs). Although different mutual funds have a minimum of $1,000, ETFs are traded like a stock. It means that you can purchase a stock on a share price, which is less than $100 in most cases.

    However, if you have a large portion allocated toward improving your portfolio, invest in stock funds, especially if you have a long-term goal. The average 30-year old who’s investing for retirement security should put in 80 percent of their portfolio in stock funds, and the rest in bond funds. This excludes individual stocks, which we recommend you keep less than ten percent in your portfolio.

    Step#5: Start Investing

    Invest

    Stock investing may seem complicated in theory, given that many investors apply complex approaches and strategies to improve their portfolio. However, the most successful investors usually stick to fundamental practices. That means investing in mutual funds for a substantial chunk of your portfolio, and only choosing individual stocks if you have proof of the company’s potential to succeed in the long run.

    Whichever option you go with, we recommend doing your research before building your portfolio. To start with, build a portfolio using low-option, broad-based options if you want to opt primarily for funds.




    *Reference: https://www.nerdwallet.com/