Stock/Investing Apps

How To Invest In Stocks

Investing in stocks may seem like a daunting process that is off limits to most people, but this isn’t the case. Investing is simply a way to put money aside while you work and live life. It’s a way to make money work for you so you can save up for retirement or fund other long-term plans. Your goal is to make your money work in a couple of investment vehicles so you can grow your money over years and years.

Do you have some money saved up and want to put it to work by dabbling in investing? Well, this article is for you! We’re going to let you know how you start as an investor, the risks of it, and how you can even invest with your employer. Let’s get into it!

What Type Of Investor Do You Want To Be?

There is an important question you have to ask yourself before you make any moves with your money and that is, what kind of investor do I want to be? Wherever you open a brokerage account, they will ask you what your investment goals are and what kind of risks you are happy to take with your money.

Some investors want to have tight control over the growth of their money, while some investors want to make the initial move and then step aside. Traditional online brokers will let you invest in bonds, exchange-traded funds, index funds, mutual funds, and stocks.

What Are The Dangers Of Investing?

Investing involves committing your money in the present to a financial goal in the future. This naturally comes with risks, and some investment products and asset classes are of course a lot more dangerous than others. But investing in anything is risky, and it’s very possible that the value of what you’ve invested will remain stagnant and not increase. 

It’s because of this that it’s important for investors to learn how to manage risk in order to reach their financial targets, both short-term and long-term.

Commissions And Fees: How Do They Work?

Many brokers will charge a commission fee for every trade, and this can be as much as $10 per trade. Due to how much commissions cost, it makes a lot of sense for investors to reduce the amount of trading they do to avoid spending additional cash on broker fees. Plus, investments such as exchange-traded funds come with fees to cover the costs of managing the funds.

Making Investments Through Your Employer

If you don’t have a lot of money to spare, you can invest as little as 1% of your salary into your employer’s retirement plan, as you’re unlikely to notice that small of a contribution being taken out of your salary.

Retirement plans provided by your employer take contributions out of your salary before taxes are calculated. You may even get so used to this 1% contribution that you might feel comfortable enough to increase these contributions as your salary increases.

If you have a 401(k) retirement account with your employer, then it’s likely you’re investing already in your employer’s stock and into mutual funds.

What Is The Minimum Amount You Need To Open An Account?

Most financial institutions require you to make a minimum deposit. For instance, they may reject your account application unless a certain amount of money is deposited, and some firms will not accept a deposit under $1,000.

Therefore, it’s important to do your research and shop around, paying particular attention to broker reviews before you commit to opening an account with someone.

However, there are firms that don’t need minimum deposits. Some might even reduce costs like account management fees and trading fees if you have funds over a certain amount in your account. Some might even provide a certain amount of trades without commissions, as a perk for opening an account with them.

Final Thoughts

If you have a modest amount of money, it’s still possible to start investing. However, it is more complex than choosing something to invest in - and even that is difficult enough! You should be aware of the risks and restrictions before you make any investments. 

It’s crucial to do your research, particularly into minimum deposit requirements and shop around with brokers to see what their requirements and commissions are. It’s likely that you’ll be unable to buy individual stocks on a budget initially, but you can diversify even with a modest amount.