Investing in stocks means buying shares of ownership in a company that is publicly traded. These shares represent a small part of the company, and as the company grows, the value of your shares could increase. If you decide to sell them at a higher price than you paid, you can make a profit.
Most people invest in stocks online through a brokerage account. You can also choose to invest in funds, which are collections of different stocks combined into a single investment.
The goal when you invest in stocks is to buy shares in companies that are expected to grow over time, leading to a potential increase in stock value, and consequently, profits for you.
For beginners, one of the best ways to start investing is by opening an online investment account. You don’t need a lot of money to begin – many online brokers allow you to open an account with no deposit required.
Some even offer a feature called paper trading, which lets you simulate stock purchases without using real money, allowing you to learn the ropes of buying and selling before taking any financial risks.
How to Invest in Stocks in 7 Easy Steps
If you’re ready to start investing, here’s a simple 7-step process that can guide you.
- Decide If You Want to Invest on Your Own or Get Some Help The first thing to do is decide how hands-on you want to be with your investments. Here are a few options to consider:
- “I want to practice first before using real money.” If you’re nervous about investing, no worries! Many brokers offer paper trading accounts, where you can practice with fake money until you’re comfortable with how the market works.
- “I want to choose my own stocks and funds.” Keep reading! This guide will show you how to pick and manage individual stocks and funds yourself.
- “I’d rather have someone else pick my investments for me.” If you’d prefer to avoid the hassle of choosing stocks on your own, consider using a robo-advisor. These automated services handle your investments for a small fee.
- “I want to start with my workplace 401(k).” If you have access to a 401(k) through your job, it’s a great starting point. Many employers even offer matching contributions—basically free money. For example, if you contribute 4% of your salary, your employer might match that with an additional 4%.
- Choose a Broker or Robo-Advisor Once you know how you want to invest, it’s time to choose a platform.
- For Self-Directed Investing: If you want to pick your own stocks, you’ll need to open an account with a broker. Some brokers, like Fidelity, are known for excellent customer support, while others, like Robinhood, are praised for their easy-to-use platforms. Look for a broker with low fees, a variety of investment options, and good customer service.
- For Robo-Advisors: If you’d rather let someone else pick investments for you, you can use a robo-advisor. These services usually charge a small fee, but some offer additional benefits like financial advisor consultations. It’s important to compare different robo-advisors to see which one fits your needs.
- Pick the Right Investment Account Once you decide whether you want to invest on your own or use a robo-advisor, you need to choose the type of account to open. There are different account options depending on your financial goals, such as a standard brokerage account or a retirement account like a Roth IRA, which offers tax benefits.The account opening process usually takes about 20 minutes and requires some personal information. Once your account is set up, it might take a few days to link it with your bank, but after that, you can start buying investments.
In summary, starting to invest in stocks can be a simple and rewarding way to grow your wealth. By opening a brokerage account, choosing the right investment strategy, and learning how the market works, you can begin your journey to financial success.
Whether you decide to do it yourself or enlist the help of a robo-advisor, the key is to start and stay committed to your financial goals.
