Embark on your Wealth-Building Journey: A Comprehensive Guide for Stock Market Newbies

INVESTING
Easy Steps to Get Started with Stock Investing
By Hal Kitzmiller
Updated September 23, 2023
For many, investing in stocks can seem daunting. However, it’s not as complex as you might assume. This guide will take you through some simple steps to invest in stocks, allowing you to grow your wealth over time.

How to Get Started With Stock Investments
The process of investing in stocks is surprisingly simple:

1. You put some money into an investment account.
2. Your bank displays all the available investment options you can invest in, much like an online marketplace showing all the available products.
3. You choose what you want to invest in, such as stocks, mutual funds, or exchange-traded funds.
4. The bank then uses your money to buy the investments you selected.

So, don’t let the process stress you. It’s much like opening a digital bank account, depositing some money, and choosing what you want to use this money for. As simple as that!

Getting Started: Needs & Tools
Before investing, it’s useful to understand your risk tolerance/comfort level and to get comfortable with the basic types of investments. Select an investment strategy that suits your comfort level, then open a brokerage account and start investing!

It is better to start investing with smaller amounts of money, a few dollars will do. There are apps like M1 Finance and Robinhood that allow you to start investing without much capital.

What’s Your Risk Tolerance?
Risk tolerance is your comfort level with the potential shifting of the value of your investment. Assessing how much risk you can take on is a good starting point before deciding on the type of investment you want to make.

Understanding Different Types of Investments
When it comes to investments, these options are available:

– Stocks: Buying stocks means you own a small percentage of a company.
– Exchange-Traded-Funds (ETFs): These are entities bundling a group of stocks together. You end up owning multiple stocks with a single purchase.
– Mutual Funds: These are contributions to a larger investment pool managed by professionals.

Having a mix of these three can help diversify your portfolio, decreasing your risk.

Choose an Investment Strategy
Don’t worry about the term “strategy”. It’s simply about how you manage your investment. There are two types:

1. Active investors who invest in individual stocks and daily trading.
2. Passive investors who make long-term investments, diversifying their money across many different companies and industries.

For beginners, a passive approach is recommended because it’s safer and easier to manage. This includes diversifying your investments, holding onto them for at least five years, and investing small amounts regularly.

Choosing a Brokerage Account
To start investing, you need to open a brokerage account. Things to consider when choosing a broker include fees, minimum deposit requirements, accessibility, and whether they offer fraction shares. Reliable brokers include Public.com, M1 Finance, and Webull which offer various features suitable for beginners, like fractional shares and a social platform to learn from other investors – in the case of Public.com.

Dive In
Investing isn’t as hard as it seems and doesn’t require previous experience. Start by evaluating your risk tolerance, understand the basic types of investments and select a strategy that matches your risk tolerance. Once you’ve picked a dependable firm to invest with, go ahead and open an account.

Remember, it’s about the long game. Always diversify your investments, keep them set on auto-invest and steer clear from risky strategies like day trading.

Now, why wait? Start your investment journey today!