Ready to start investing in stocks but unsure of how to begin your investment journey? You’ve come to the right place. There’s quite a lot you need to know before you actually dive into the world of stocks. That’s why we’ve put together a step-by-step guide explaining how to invest your money in stocks the right way.
Determine Your Investment Approach
The first thing you need to do is consider how you will start investing in stocks. While some choose to purchase individual stocks on their own, others, in fact, prefer to take a much less active approach to investing by opting for robo-advisors, where the brokerage essentially invests money on your behalf as per your risk tolerance and investment goals.
Decide how Much You Want to Invest in Stocks
Remember that any money you need in the next 5 years should not be invested in stocks. While the stock market will rise in the long run, it’s way too volatile to invest funds for the short term. So, avoid investing your emergency fund, your vacation fund, your child’s tuition payment, cashing your savings up for your down payment, etc.
Open an Investment Account
All of the advice about investing in the stock market really doesn’t do much good unless you have a way to actually buy stocks. To do this, you will need a specialized type of account that’s called a brokerage account. Such accounts are offered by Charles Schwab, TD Ameritrade, and many others. Opening a brokerage account online is quick and easy, and typically doesn’t take more than a few minutes. You can then fund your brokerage account.
Choose Your Stocks
Now that you have opened a brokerage account and added funds to it, you will need to choose your stocks. When choosing stocks, remember to always keep your portfolio diversified, invest only in companies with business models you understand, avoid opting for high-volatility stocks until you’ve experienced the highs and lows of the stock market and have a hang of investing, and learn how to evaluate stocks.
