Curious About Investing? A Few Things You Should Know Before You Get Started

By Sara

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Last Updated: October 19, 2022

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The word 'investing' can sound scary.

You may even think about men in suits or people yelling on the stock market floor. However, investing is no longer just for businessmen but for the common person.

It has never been easier to start investing, but all of the information about investing assumes you've been trading your entire life.

This is a step-by-step guide on how to invest for a true beginner. 

 

 

What is investing? 

Investing, in context to the stock market, is when you buy stocks, bonds, mutual funds, or index funds at a low price and sell at a high price.

This is the very basics of investing - it's a lot more complex than this.

You can short stocks, hold stocks, and so much more. But the basic point is that you are investing in the stock market in some way, buying low, and selling high.

Of course, there is no guarantee that you will make money, but generally, if you hold for a long time, then you should expect growth in your portfolio. 

It's also good to note that you can only buy or sell stocks when the market is open - 9:30 am to 4:40 pm. The market is closed on holidays and weekends as well. 

 

 

Where do I invest? 

Investing has become easier than it was in the past.

Before, you had to have someone buy for you, and this required you to pay a fee. Brokerages like Robin Hood broke this trend and allowed everyday people to invest in the stock market without paying fees. 

You can still invest with a brokerage firm and have a physical person manage your portfolio.

You can tell them how much you want to invest and even certain types of stocks, but their office will place the order and fill it for you. Of course, there will be a fee associated with this. An example of these types of brokerage firms is Merrill Lynch. 

You can also invest with brokerage stocks like Robin Hood, Fidelity, Merrill Edge, and many others. These apps allow you to trade stocks (buy or sell) right on your phone. You can link your bank account to this app and choose whichever stock to buy or sell. There is no cost to buy a stock other than the price of the stock. 

 

 

How much money do I need to start investing? 

Every brokerage account is different, but some accounts can be opened up with only $1.

So you no longer need hundreds of thousands of dollars to invest. If you have an extra $100 a month and want to invest that, you can. Robin Hood and other apps allow you to buy fractional shares, so if you want to buy Apple, for example, you can buy half or less of that stock.

You also can reinvest any dividends (payouts from stocks you own) back into that stock or other stocks. How much you choose to invest is entirely up to you. 

 

 

Where are the best places to learn about stocks? 

One of the scariest parts of investing is learning about actual stocks.

There is a lot of fake news and people talking about stocks that may not perform well. It's best to make up your own decision on stocks. Over time you'll be able to evaluate a stick, but at the beginning, watch shows like Jim Cramer on the news to see what he is saying about stocks.

Find creditable YouTubers, bloggers, and even TikTokers and see what stocks they are talking about. 

Everyone's investment strategy is different. Some people invest in the S&P index fund (a collection of 500 stocks in one account), individual stocks, mutual funds, or dividend stocks. You will eventually find your own strategy.  

 

 

Do I need to look at a newspaper every morning, or are there online websites? 

The old fashioned way to go over stock prices and stock news was the read the newspaper every morning.

This is still an option, but there are so many great online tools to help you see a stock's history, current price, and so much more. You can go onto Yahoo Finance and find great stock information.

If you google a ticker symbol (An abbreviation of the stock's full name), Google will provide you with all of that specific stock info. Apple also has a stock app you can access on your phone.

With technology, it has never been easier to know the current price of a stock and its history. You can visit Market Watch or Seeking Alpha if you are looking for more in-depth online information. These two websites will provide you with stocks and earning reports for any company that you are looking for. 

 

 

Final Thoughts 

Investing is a great way to build wealth, especially when starting at a young age.

Compound interest will allow your accounts to grow the longer you hold them. The best way to learn about investing is to just start asking questions, gathering information and testing. That is the best way to learn about the apps, how to fulfill an order, and what happens when you earn or lose money.

Start small and learn from those mistakes you may make. It'll help you learn how to evaluate stocks and the type of investor you want to be.

Photo by Anna Nekrashevich

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