How To Get Started With Investing
I often think back to my high school years and I always wonder where I would be today if I knew then what I know now. I’m sure that I’m not alone in that regard. It is human nature to reflect and wonder how your life would be different had you made different choices at certain stages of your life. I remember taking my first business class and one particular project that really caught my attention. We had to pick 3 stocks that we wanted to build our portfolio with and then we would track our portfolio for a month to see how we did. I couldn’t even tell you who’s portfolio did the best but, I do remember that my portfolio did well and a passion was born. Although I wasn’t able to start an investment account I would spend time analyzing and following businesses and how their stocks were performing.
A few years later I joined the military and set out on new adventures. My love for investing soon faded as I began to experience all that life had to offer a young man and his newfound freedom. I would go on to work in many different career fields and live in many different areas. I spent years making money and spending money and not really thinking much about saving and investing. The most investing I ever did was a small contribution to a 401K with whatever employer I happened to be with at the time. I would think about investing from time to time but I always felt like I had plenty of time to get started later or I will wait until I have more money to invest. Little did I know I was dead wrong. The time is now and you can do so with as little as $5. The .5% or 1% interest that you earn on your savings account doesn’t even keep up with the rate of inflation. That means that you are losing money that is sitting there with those kind of rates!
The first step is to find a broker or an online trading platform. Brokers charge fees to handle your investing and online trading platforms are more DIY. I prefer to handle my own investing and there are plenty of tools and resources out there to help you make smart decisions. I would also take a few courses on investing in the stock market if you don’t have much experience so you can understand what you are looking at. There are plenty of free courses online that will teach you the basics. Once you have completed these steps you are ready to start investing!
Now it’s time to start putting your money to work. There are many different avenues to invest your money such as real estate, stocks, bonds, mutual funds, etc. I’m going to stick with stocks and mutual funds as that’s where most people will start. Mutual funds are funds managed by investment firms. You can choose from many different funds that invest in many different sectors of the economy. The funds you will choose will depend on your objectives and passion. Are you looking for long term growth? Are you looking for short term gains? Do you believe in the future of electric vehicles? There is something out there for everyone. If you do not have a broker you can still invest in funds on your own through something called an ETF. These are funds that you can find through online trading platforms and there is no minimum investment required. Mutual funds are considered to be safer investments since your money is professionally managed and diversified by investing in many different companies.
If you feel like you want to give it a go on your own then you may want to invest in individual stocks. There are TONS of companies in the public market that you can invest in. I would start with a few companies and then you can build from there over time. You should think about what sectors of the economy are performing well and which ones might see the most growth in the next ten years. You can then pick companies from those sectors that have a proven record of success and have been around for a while. Think about products and services that you use yourself and strongly believe in. If you know a product is great and everybody is using it, it is probably a good investment.
Now you know what to do so get out there and start increasing your wealth. Make sure you do your homework on a company before you pull the trigger and make sure you know what your objectives are. Read and understand a company’s financials and look at the charts. You should at least have a basic understanding of this before you get started. Best of luck to you and congratulations on taking the first step towards a better future.
