How To Get Started Investing In The Stock Market
The stock market is a risky place to invest your money. However, the potential rewards are enormous since you can multiply your initial investment many times over. Investing in the stock market can be quite confusing, though. The good thing is that there are several ways to get started easily with as little as $5.
There are numerous apps that make investing easy:
Invest in stocks, ETFs, options, and cryptocurrencies, all commission-free, right from your phone or desktop.
I am a fan of Robinhood because getting started only took a few minutes and I was able to get started with only $5. Robinhood doesn’t take any fees.
With $1 a month, you’ll get a personal investment account with unlimited trades and education. (Balances $5k and over only cost .25% a year)1
Although Stash is not free (you pay a $1 monthly fee) I like because you can invest in fractional shares.
A fractional share is a fractional share is a share of stock that is less than one full share. I’ve bought fractional shares of Amazon and Alphabet since I don’t enough money to buy a whole share. I will keep buying fractions until I eventually buy the whole.
You need money before you can invest in the stock market, so the first step is to save. Save as much as you can without cutting into your regular monthly budget. Investing in the stock market is risky; hence you need to ensure your investment doesn’t suffocate you in case things don’t work out.
Learn the terminology
Familiarize yourself with the terminology that’s used in the stock market. Educate yourself on the different types of stocks so that you can make an informed decision about how you’d like to invest. Read widely. Find out how stock values increase and decrease.
Determine which stocks to buy
After familiarizing yourself with how the stock market works, choose which stocks you will invest. Ideally, you’d want to make multiple investments in different areas so that in case one fails you still have chances of succeeding in another. Try to invest in unrelated stocks, but not too many so that you’re able to manage all of them. Blue-chip stocks are safer but may cost more. If you can afford them, it’s better to invest in these.
Determine when to buy
Determine when you want to buy the stocks. Timing is everything when it to comes to the stock market. Don’t be too speculative, though. You may fail horribly. It’s best to do your research when determining when and what to buy; don’t rely on stock tips.
Purchase and hold the stock
Once you’re ready, buy the stock and hold it. Don’t sell it too fast; keep it for a couple of years if you can. But if the value of the stock rises very high then it may make sense to sell at a profit. Another situation where you might sell is where the value of the stock is too low and the company is very unlikely to be profitable in the future. You’d want to rescue some of your money.
Don’t be afraid to consultant a banker or stockbroker with a good reputation if you’re unsure of what to do.