A Beginner’s Guide on How to Start Investing in Stocks

Published by Dan Silvers on

So, you want to take control of your money and turn your funds into profit, yet you have no idea how to start!

Investing can be quite tricky with tons of jargon and even the best of strategies seemingly requires the ability to tell the future. 
Don’t worry though! We are here to help! 

No, we aren’t going to give you psychic clairvoyance, but we are going to teach you how to become a successful investor! 

So without further ado, let’s dive into how to start investing in stocks like a pro!

What Are Stocks?

Stocks are investments that basically represent ownership in a company and you become part-owner of the company when you purchase the shares.

There are two types of stock that corporations us to raise money, common and preferred.

A common stock gives you a proportionate share of the company’s profits or losses. And on the other hand, preferred stock comes with predetermined dividend payments.

Stock investing, when done correctly, is one of the most effective ways to build long-term wealth. 

Most on Wall Street will tell you it’s impossible to time when the market will dip and climb. While it is foolish to think you will hop in at the bottom and out at the tip of a market cycle, there are ways to discover changes in the market as they emerge.

By finding those changes, you can make solid profits in an uptrend and keep the most of those profits when the market eventually flips.

Knowledge Is Power

Along with the knowledge of basic trading methods, traders need to keep up on all the latest stock market news and events that will affect stocks.

Do your homework, scan popular business news, and visit reliable financial websites.

How to Invest in Stocks

Investing in stocks easy to do as most companies have a pretty simplified process, which allows beginners to open an account through a website or their mobile app.

Common stocks are a popular option, which in turn allows a stockholder to vote on the company issues and most of the time stockholders receive a vote per share. Companies will also give out dividend payouts and the payouts change based on a company’s profitability.

When you add your stocks to a portfolio it means you own a percentage of a company, hoping it increases its value.

Beginning investors should note there are two main ways to make money from stocks, from collecting dividend payments and of course selling stocks when the share price goes up.

How to Invest in Stocks

Investing in stocks can actually be done in quite a few ways. If you would like to develop your own method and strategies for investments, you can open what’s called a brokerage account.

Luckily, if you don’t know where to start or what to do, you can try opening an account with a robo advisor. A robo advisor will do the work for you, helping you know when to make trades and how many shares you should buy. 

The number of companies offering brokerage accounts has also dramatically increased. Brokerage companies provide a simplified version of trading, like the app Robinhood, where investors can buy and sell stocks and crypto all from one’s mobile app.

Also, stocks can be purchased in retirement accounts; traditional and Roth IRA. This allows investors to grow their retirement money in their accounts with taxes deferred. 

Competition has also spurred most of the brokerages to slash their commission fees. This can add up quickly if you buy and sell stocks or ETFs frequently. Robinhood is not the only company that does not charge commission fees. Interactive Brokers started providing an unlimited number of commission-free trades on U.S. stocks with no account minimums or inactivity fees.

How Much Money Should You Invest in the Stock Market?

Since most brokerages do not require a minimum amount to open an account, you can start investing quickly with even just $100.

Discount brokers are great for beginners with a small amount of money to start, but a discount broker does not typically provide advice. 

Good Stocks to Invest in for Beginners

Investing in high-quality stocks such as blue chips and dividend-yielding ones are often common strategies. One reason investors shoot for the blue chips is because of the potential for growth and stability. Also, they usually will produce high dividends, which includes companies such as Microsoft and Coca-Cola Co.

There is also automatic investing, which can also help decide how and when to invest, creating consistent investing habits.

Be Realistic About Profits

Your strategy doesn’t always have to be successful. Many traders only win 50% to 60% of their trades.  Make sure the risk on each trade is limited to a specific percentage of the account, and that entry and exit methods are clearly defined and written down.

Stay Calm

There are clearly times where the stock markets test your nerves. Decisions should be governed by your logic and not your emotions. As a trader, you need to learn to keep greed and fear at bay. Also, your decisions should be governed by your logic and not your emotions.

Stick to the Plan

Successful traders do have to move quickly, but one doesn’t have to think too fast. Why is that? They have developed a trading strategy in advance, along with the drive to stick to their strategy. It is crucial to follow your plan closely rather than try to chase after profits.

A Beginner’s Guide on How to Start Investing in Stocks

Well, there you have it! Now you know how to start investing in stocks today!

Trading can be difficult to master. It requires time and discipline. With the practice and performance evaluation, you can improve your chances of beating the odds. For more articles on finance and lifestyle visit our page today! 


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