How To Get Started With Investing In The Stock Market
They say you're never too young to start saving and that's absolutely true. One day you're 30 years old dancing the night away, dropping $25 on martinis without a care in the world, and next thing you know you're 72 and still working to pay off all those youthful indiscretions. (But they were so much fun, weren't they?) Although you can file for social security once you turn 62, it's hardly enough to keep anyone living comfy, and, apparently, the social security program is scheduled to run out by 2035 (via CNBC). So, yes, if you want dough in your bank account well into the winter of your life, you're going to have to do it yourself.
That's where investing comes in. While investing in real estate and other big purchases can be a great idea, investing in the stock market is also something worth considering. When you invest in stocks it basically means you're buying shares (parts) of a public company which makes you essentially an owner — one of many, of course. Then you sit back and hope the company does well so the shares you've invested in become more valuable, giving you the opportunity to sell them or hold on to them for the long run and see just how far that company can succeed and put even more money in your pocket (via Nerd Wallet).
But that's the simplified version of investing. Before you do anything regarding dropping money into the stock market, you want to do some research. Like, lots of research.
Get to know the stock market
If you look at the stock market or hear anyone talking about stocks, shares, the Dow, and all the rest of it, the whole thing can feel really daunting. So, you want to keep things small, like dipping your toes in a pond, before diving into the ocean of investing. "First-time investors can start by brushing up on financial lingo and spend time learning about the markets," director of Robinhood, a financial services company, Dheerja Kaur tells PopSugar. "Financial news can also be helpful in staying up-to-date on the markets. There are a variety of resources, such as articles, podcasts, and newsletters."
As you familiarize yourself with the stock options that are out there, make a list of the companies that you think have the potential to grow and earn money for you. Purchasing stocks in this way is known as investing in individual stocks. But if you're not comfortable putting all your money on one horse, so to speak, then invest in stock EFTs (exchange-traded funds). When you do this, you buy shares in multiple companies that are all similar in what they're trying to do on a business level (via Forbes). It is definitely wiser to invest a little bit in a few companies than it is to throw a huge chunk of change on one bet. A diverse portfolio when it comes to investing gives you more chances to earn money.
Look at your budget, then make your move
You don't have to be rich to invest in the stock market. In fact, the only requirement is that you're 18 years of age and have a few bucks to invest. You can actually invest with as little as $10 (via The Motley Fool). While that isn't likely to have a big return, it's still a place to start.
Once you have your budget figured out and you know what you want to invest in, you'll need to open an investment account (via Bank Rate). At this point, you also need to decide whether you want a professional to oversee your money or if you want to do it all on your own. If you've done your research and feel like you have a really strong handle on how things work, then going it solo can be a fun project — as long as you play it safe until you get the hang of things. If you've researched the stock market until you're blue in the face and it still makes zero sense to you, then just have a pro do it for you. There's no shame in conceding that you just don't "get" the stock market. It does involve some risks, after all, and some people just aren't into taking risks.
Then, pounce. Or, rather, buy the shares you have your eye on and let the investing begin. Of course, there are still elements in there that must be evaluated and understood, and you should always be aware of potential fees, especially if you're doing it without an advisor, but these are very the basics of getting started in the stock market (via Insider). Now, get that investment portfolio together and start making money.