About 20% of Americans invested in the stock market during the last quarter of 2020. It’s easier to invest in stocks than ever before.
Technology makes it easy to set up an account on a brokerage site and start trading. You can make stock trades on your phone.
That accessibility isn’t a guarantee that you’ll make money. Investing in stocks is still intimidating because it seems like there’s so much to figure out. Do you feel like you need a Stocks for Dummies guide?
You’re in the right place because this guide will walk you through the steps to start investing in stocks.
1. Pick an Investing Strategy
Do you think of yourself as a risk-taker? Do you want to earn returns slowly over time?
Risk-takers are more likely to invest in stocks that have a higher return, but they’re high risk. You’re more inclined to invest in individual stocks.
On the other hand, you could take a conservative approach like investing in mutual funds.
Ask yourself how you’d like to invest in stocks. You might want to be completely hands-on or you’re more comfortable handing the reigns over to a financial expert.
These questions determine your investing strategy. If you want someone to handle investing for you, then it makes sense to use a robo-advisor.
It’s an affordable way to invest and have someone else pick the stocks for you.
2. Learn What Drives the Stock Market
The stock market is driven by emotion. It’s important to understand that because you don’t want to overreact to economic news.
Look at economic indicators like housing starts, interest rates, unemployment, and inflation. These reports are good to learn about the general health of the economy.
If the economy is heading in the wrong direction, you stand to lose your investments.
One of the best ways to protect yourself is to diversify your portfolio. Invest in other areas like international stocks and real estate. You can invest in markets anywhere in the world, from Australia to the Philippines.
3. Pick a Brokerage
A brokerage is how you’ll make your stock trades. Look at several investment companies and compare their prices and features.
Check to see if you’re limited to certain stock markets or if you can make different types of trades. One platform has access to 12 different markets, and you can check it out for yourself.
Make sure that the trading platform has an app for secure trades on your mobile device. One feature to look for is the ability to research individual stocks. It’s a convenient tool to have as you’re deciding how to invest.
Stocks for Dummies: Start Investing in Stocks Today
This Stocks for Dummies guide showed you the basics of investing in stocks. Think about the types of trades you want to make and your trading style.
Remember what drives the stock market so you don’t make irrational trading decisions. Most of all, diversify your portfolio.
Are you ready to learn more about personal finance? Check out the blog for more investment tips.