Investing for beginners can seem overwhelming and scary. If you wanted to invest your money a decade ago, you would’ve had to make deals in-person. Technology is so advanced now that you can invest your money from the comfort of your home. All investing is, is putting some of your money to use and having your money grow. If you invest in a company, that means you own part of that company. You can invest your money in many different ways. I believe that the easiest way of investing for beginners is by buying shares of stock (buying a share of the business). If you don’t want to have to pay someone to manage your investment portfolio, you can easily invest your money yourself! I learned how to buy/sell stocks from portfolio managers when I worked in the Finance department of a private bank, and it is simple. Here are the basic steps of investing for beginners!
1. Pick A Brokerage Account
A brokerage account is just a middle man, or intermediary, that invests your money for you. It is a place where you can buy, sell, and trade investments. A brokerage account makes the process of investing much easier for you to invest your money.
While many people use apps like Robinhood, I actually advise against using RobinHood. Many investment analysts agree that Robinhood is not to be trusted as much as other brokerage institutions.
The best brokerage accounts are: Fidelity, VanGuard, TD Ameritrade, and Charles Schwab.
For teaching purposes, I am going to use Fidelity because that is what I personally use. Fidelity is a great brokerage account for beginners. You can download the Fidelity app on your phone, or you can go to Fidelity.com and click “Open An Account” under the login information.
2. Get Familiar With The Brokerage Account Before You Start Trading
If you don’t have a background in Finance, it’s ok! Just look up the Financial jargon that you don’t understand on Investopedia. You can also watch a YouTube video on how to properly use the specific account you have picked. Make sure that you understand how to use the app/website and where everything is located within the account. Familiarize yourself with where you keep your account information, where to click to buy/sell stock, etc.
Basic Investing Terms:
Buying stock: Purchasing shares of a company
Selling stock: Selling shares of the company that you have bought
Shares: Pieces of the company (for example, if you have 2 shares of Apple, you have 2 pieces of ownership of Apple)
Ticker Symbol: Symbols (usually 4 or 5 letters) that represent the company. For example: Apple’s ticker symbol is AAPL on the Stock Exchange). If you’re not sure what the ticker symbol is for the company you want to invest in, here is where to find it:
Buy Low Sell High: Buying stock for a low price so that you can sell it when it becomes more expensive. You will make a profit. You can reinvest this profit (put it back into your investment account) or just keep the money you made as cash.
3. Link Your Checking Or Savings Account To Your Brokerage Account & Transfer Money From Your Checking Or Savings Account To Your Brokerage Account So You Can Begin Investing
LINKING YOUR ACCOUNT: In the Fidelity app, you will click the “Transact” section at the bottom of the screen . Link your bank account, and then you can click the “Transfer” button to transfer money from your bank account into your Fidelity account.
TRANSFERING MONEY FROM YOUR BANK ACCOUNT TO FIDELITY ACCOUNT: You can schedule transfers to automatically transfer a set amount of money to your brokerage account. For example, I have mine scheduled to transfer $100 from my checking account into my Fidelity account every month.
Now that you have some money in your investing account….
4. Decide Which Stocks You Want To Invest In
- Are you wanting to buy stock, make a profit, and then sell it soon?
- Riskier stocks provide the greatest returns (the higher the risk, the higher the return).
- You can go to Yahoo Finance to see which stocks are up and which are down. Buy the stock when it’s at a lower price so that you can sell the stock when it rises and make a profit.
- Do you want to have a long-term investment that makes money gradually?
- If you are investing for the long-term (over a year), I suggest investing in safer stocks.
- The S&P 500 is a great ETF (exchange-traded fund). It is low-risk and has a decent return over long periods of time. I also recommend investing in technology over time (like Apple).
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5. Start Investing!
The Regular market trades between 9:30 a.m. and 4:00 p.m. Eastern Time
- In order to trade in Fidelity, you click the “Trade” tab and that’s where you can buy and sell stocks.
- EXAMPLE: If you want to invest in Apple:
- You would buy _ shares of AAPL or you could buy exactly $100 worth of AAPL stock.
- Most of the time, you will select “market order” for the type of order
- Confirm the order, and watch your investments over time.
6. Sit Back, Relax, And Let Your Investments Grow
You don’t need to watch your investments every second of every day. Check on them every now and then in the “Accounts” section, but don’t get upset if your stock is down. It will go up and down every day, so just let it ride out until you are officially ready to sell your investments.
These were the 6 basic steps on investing for beginners. I hope you learned a little bit more about investing in stocks. Let me know which stocks you decide to invest in!
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XO,
Layton
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