Stocks - Smart Saving Advice

Ahh.. stock investing. It may sound tempting, but how does a beginner even approach it? Is it hard to get into stocks? The truth is it’s not hard at all to begin investing. In fact, a lot of online brokers (Robinhood, Fidelity, etc.) make it easy for inexperienced investors to start buying and selling stocks quickly. Most brokers charge nothing to open an account and require no minimum deposit to get started. Most brokers also now have zero commissions on trades as well. In this article I’m going to be providing a few tips to help new investors understand how simple it can be to get into stocks. I was a beginner myself, (everyone has to start somewhere) but through the use of online brokers and a lot of research, I’ve been able to make money buying and selling stocks. My goal is to help you do the same, so let’s dive in! Is It Hard to Get Into Stocks? As I mentioned, it’s not hard to get into stocks. Even if you’ve never thought about stock investing before today, there are many tools and resources out there to help you start earning money. I’m going to be sharing some tips I’ve learned over the years below: Tips To Help You Get Into The Stock Market I could go through and make a massive list of everything that I’ve learned over the years. However, instead of boring you with that I’ll give you four tips that can help you get started on your investing journey. 1. Open An Online Brokerage Account In order to start buying and selling stocks, you will need a brokerage account. While you can go the traditional route and open an account with a broker that has a physical location, the fastest and easiest way to get started investing is to open an online broker account. Some of the top online trading platforms include: RobinhoodFidelityTDAmeritrade SoFiE-Trade While all of these brokers offer $0 commissions and don’t cost anything to open an account, they all offer different advantages and disadvantages so you’ll need to do your research before choosing one. Robinhood is a popular broker that many people use when first starting out. It does have some limitations on the account type you can or can’t have that which could be a deal breaker. What many people like about Robinhood is the fact that it’s easy to use and costs nothing to get started. The real time quotes for share prices are pretty helpful when buying stocks, but this is something most online brokers offer. Again, you’ll need to do your own research to find the trading platform that fits your needs the best. 2. Start Trading Low-Priced Stocks One of the best ways for beginners to start growing a small account is by trading cheap stocks. However, cheap stocks are often cheap for a reason… they are risky. So if you decide to go this route you will want to have a solid penny stock investing strategy to avoid the common pitfalls and risks associated with these stocks. What Are Penny Stocks? Penny stocks don’t always sell for literal pennies. The term refers to a stock that trades for $5 or less per share. The companies who sell penny stock shares are typically small or startups without any liquidity. These companies trade infrequently on OTC (over-the-counter) bulletin boards as opposed to the big stock exchanges (like the NYSE, NASDAQ, etc.) What Are The Risks Involved? It’s important to know the risks involved with penny stock investing: The market for low-price stocks is extremely volatile The penny stocks you come across can be from fraudulent companies or companies in significant debt Because most of the companies selling penny stock shares are new, they lack any history to be able to identify a ROI What Are The Rewards? Because the market is so volatile, it fluctuates rapidly, giving you the opportunity for quick gains. This is why a lot of day traders (those who buy and sell stocks on the same day) gravitate towards this investment type. Keep in mind though, most traders lose money investing in penny stocks so it’s important to do your due diligence when considering this strategy. I’d recommend using penny stocks as a means for getting your foot in the door when it comes to investing and nothing more. This means I would only buy a few shares of companies I’ve done my homework on just to get an idea of how stock investing works. 3. Day Trading Day trading is incredibly popular among new investors because of the high reward potential. There’s also a plethora of resources out there to help you devise a solid day trading strategy. Here’s one strategy you can implement right away: Technical Analysis With technical analysis you’re focusing on the performance of the actual stock itself. Historical data is relied on heavily to review and understand the stock’s performance over time. You’ll be trying to uncover past trends that could give you insight into what the stock might do in the future. Here’s what you should look for: How the stock price moves (or price action) over time. I.E. does the stock have a history of going up at certain times or with certain events. Price trends (predictable dips and spikes). You should check for trends on multiple charts. Finally, you should look for patterns. When a stock moves in a specific way it has the potential to repeat that action similarly in the future. 4. Don’t Stop Learning By being open to learning continuously you will be able to adapt more easily to market changes and shifts. When the market begins to change, and your go-to strategies no longer work, having a large knowledge base can be extremely helpful when it comes to your ability to adjust. This means you should read (start with this blog!), watch videos on YouTube, take online courses, join groups on Facebook and just absorb everything you take in. Final Thoughts So..is it hard to get into stocks? On the contrary, it’s quite simple! As I recommend in this article, to get started investing you should: Open an online broker account (I use Robinhood, TD Ameritrade, and Firstrade) Consider small investments in penny stocks to get your feet wet and learn the ropes Consider day trading after you’ve obtained the knowledge necessary Don’t stop learning to be able to adjust to changes or shifts in the market While these are simple ways to get started investing, they won’t work for everyone. I can’t stress enough how important it is to consider your own needs, experience level, and budget when deciding whether or not stock investing is right for you.