How Do I Start Investing?

If you want to start investing, you’re probably wondering where to begin. There are so many things that could be going through your head, as to what you should invest in, how much you should invest, and exactly how you should go about investing the money. Here is a basic guide that will help you decide exactly what you need to do and learn before you start investing.

The first thing you need to do before you invest any money, is learn the basics about the types of investments you can make in the stock market. For example, there are individual stocks you can buy. If you want to be a little safer, you can invest in mutual funds, which are a whole bunch of stocks at once. You can also invest in bonds, which are even safer. Until you know what these terms mean, you shouldn’t invest a single penny in the stock market. Once you know some of the basics, then you will know what you feel comfortable putting you money in.

Once you figure out what types of investments you want to make, you’ll need to come up with some specifics. If you want to invest in a few stocks, what type of stocks should you invest in? If you want to invest in mutual funds, which ones should you buy? This research can easily be done on the web. There are many websites (like MorningStar) where you can just type in the name or symbol of the stock or mutual fund, and you’ll learn all about it, as well as get some advice about what others think. Once you’ve learned about the company or mutual fund, then you will be able to decide what you should buy.

As far as how much you should invest, it should only be something that you don’t mind locking up for a while, or something that if you lost wouldn’t make it so you couldn’t pay your bills. If you have no problem keeping the money invested for a while, then it probably isn’t too much. Another great way you can invest is something like a DRIP. This is where you will invest a small amount every month into the same stock or mutual fund. This works well because you will buy at different prices as the stock/mutual fund fluctuates, so the price you spent will even out. You also won’t miss the money from your spending since you’ll only be putting in a little at a time, but over time it will surely add up!

Another thing you’ll have to decide when investing is how to invest. There are many online brokers where you can do everything yourself, and therefore you don’t pay a lot of money per trade. If you’d prefer to get advice however, you can get a brokerage account where you deal with an advisor, but of course you’ll end up paying more money per trade. There are tradeoffs with each one, but you should do what is best for you.

When you decide you want to invest in the stock market, there are many things you will have to figure out. As you can see though, once you learn a few things, you’ll be able to invest like a pro!

By: James Grant
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