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? Getting into stock investing is not hard at all and it is far easier than it used to be. In fact, a lot of online brokers (Robinhood, Fidelity, etc.) make it easy for inexperienced investors to start buying and selling stocks quickly cheaply (or even for free). Most brokers charge nothing to open an account and require no minimum deposit to get started. Many brokers now also have zero commissions on trades. This is a major shift that has happened over the last few years as even the cheapest brokerages used to charge $5-10 to buy and $5-$10 to sell a stock. Now buying and selling is commission free at most online brokers! This major change in the market is truly a game changer for beginners as they can start investing with smaller amounts of money now and slowly build up their portfolio as they have money to invest over time. 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. All of us have to start somewhere so I will give you some basic information as well as try and get you pointed in the right direction to get you started. Is It Hard To Get Into Stocks? As I mentioned above, it’s not hard to get into stocks. Even if you’ve never thought about stock investing before today, there are tools and resources out there to help you start earning money. The first thing that you should know when buying stocks is that buying index funds or ETFs are likely the best place to start for most people. Now I’m not a financial advisor so your situation might be different, however starting with learning about these two options is a good idea. Index funds and ETFs are designed to allow you to invest into a basket of companies rather than just a single one. So rather than just buying shares of Apple, Walmart, Target, etc. you can buy a portion in hundreds or thousands of companies by using an index or ETF. I invest all of my retirement funds into a variety of indexes and ETFs. This way my portfolio is balanced and not super heavy into a specific stock or sector. I’m going to be sharing some tips I’ve learned over the years below: Tips to Help You Get Into The Stock Market 1. Open an Online Brokerage Account In order to start buying and selling stocks, the first thing you will need to do is open 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 E-Trade While all of these brokers currently 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 was the broker I chose when I first started out and I still use it to this day. However I also use a company called Firstrade for my retirement savings (since Robinhood doesn’t offer IRAs currently). What I liked about Robinhood initially was the fact that it’s easy to use and cost nothing to get started. The real time quotes for share prices was and continues to be helpful when buying stocks, but this is something most online brokers offer as well. Again, you’ll need to do your own research to find the trading platform that fits your needs and those will vary depending one either you typically trade on your phone or desktop and what other things you need your brokerage to do. 2. Start Investing Regularly If there is one thing I could recommend to you in this article (and you would listen) it is that you should start investing now and do it on a regular basis. Even if you don’t have a lot of money to trade with you can still start with a smaller amount. The first stock trade that I ever made was with $100 and it cost me $7 to make the trade (cause trades weren’t free back then). Whether you have $1, $5, or $100 just start investing today! If at all possible, set aside a specific amount on a regular basis and consistently invest it. Let’s say you can only afford $20 a month. Then take that $20 and invest it at the same time into the same index fund or ETF every single month. I personally have money automatically come out of my account and go into my Roth IRA on the 15th of each month. I then use that money to buy an index fund at that exact time. Then don’t worry about what happens with the stock market etc. When it goes down (and it will) then your monthly amount will buy you more of that fund. When the stock market goes up (and it will) then you will buy less. Consistency is key when investing long term into the market. 3. Don’t Waste Time & Money Trading Now after just saying that investing regularly is best you might be wondering why it seems like I just contradicted myself. Afterall isn’t trading and investing the same thing? Although some people use the terms interchangeably I personally feel like they are totally different. To me, investing is something that you should do for your entire life and something you shouldn’t worry about on a regular basis. However, trading is an active thing that requires constant watching and movement. Investing for the long haul is a great way to have a good chunk of money when you retire but trading is a good way to add a lot of stress to your daily life while causing you to lose money! Right now, day trading, trading options, buying meme stocks, etc. is very popular and if you go into any major stock market forum you will see people talking about trading in the stock market this way. But really what many of these people are doing is gambling in the market. A few years back I decided to give day trading a try. Not only did I try day trading but I tried to day trade options. I started with $5,000 and quickly turned it into $2,000 (yeah I wasn’t too bright). Then I took that $2,000 and day traded it to $800 (noticing a pattern yet?). Then I got lucky and made back the $1,200 that I had lost (back up to $2,000) so I got cocky and invested it all in a “sure thing”… and you guessed it… I lost it all. Over the course of about 6 months I got up early to trade, went to be late (doing research) and still lost $5,000! Now I have no doubt there are people who can day trade and make money, or those who will make millions on meme stocks, however that isn’t most people and likely it’s not you either. If you want to take a flyer on the next meme stock then you can certainly do that but just know that you aren’t really investing with that money… you are gambling. I would have made just as much money (and had more fun) going to Vegas and spending that 5k at a casino than I did losing sleep and the money trying to day trade! Don’t think that you are smarter than the expert traders and try and out trade or outsmart them. If you feel the need to be a part of the “next sure thing” then take a tiny amount of money (whatever that is to you) and give it a whirl. Just know going in that it is likely to make you nothing. 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 our 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! Once you get a brokerage account opened you can easily invest a certain amount every day, week, or month into your favorite fund or ETF and slowly get your account growing over time. While the above are simple steps 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 a specific method of stock investing is right for you.