The stock market is one of the best places to turn savings into wealth over the long term (emphasis on “long term”). Let’s compare investing in stocks to the most popular alternative — a regular savings account. If you leave your money in a traditional savings account, you probably won’t make enough in returns to outpace inflation. With that in mind, it’s important you seriously consider stocks when making your first investment.
As a newbie investor, it’s not easy to learn how to invest in stocks — much less finding “winners”. That’s why we highly recommend you start off by working with a broker. Their assistance will help lessen the burden.
Here are four basic (but important) steps to help you execute your first trade.
STEP 1: Find a broker that you like
Nearly every aspect of stock trading is done through a broker, so it’s important to have one you like. To find the right broker for you, you can start by reading reviews (there are plenty). The reviews will detail the pros, cons and unique features of each individual broker. Plus, they’ll save you the time of researching brokers yourself!
STEP 2: Pick your stocks
Once you’ve set up your brokerage account, it’s time to start investing. When picking stocks, a good place to start is by researching companies you are already familiar with as a consumer (Apple, Facebook, Amazon, Nike, etc).
Comb through the companies financial report, but don’t get overwhelmed by the countless amount of charts, data and fancy lingo. In simple terms, find companies that make you want to be part owner (which is what you are once you purchase shares in this company).
STEP 3: Decide how many shares to buy
Do NOT feel pressured to buy a certain number of shares, or to invest your entire portfolio, all in one shot. Consider starting small to get a feel for the process. This will enable you to determine how much you actually enjoy investing, and whether or not you have the appetite to sustain losses. If you’re losing sleep over your portfolio, it’s probably not worth it.
STEP 4: Learn the lingo
Investing in the stock market requires at least a baseline knowledge of some financial lingo. There are plenty of cheat sheets available, even for the newest of the newbies. After all, everyone starts at the beginning of the maze!
LAST STEP: Start buying stocks!
Now you’re ready to invest! Best of luck!
Questions or Comments: If you have any questions about what you have read above — or you still don’t feel confident enough to jump into investing — leave us a comment below and we’ll be more than glad to help out!