| How to Start Investing in the Stock Market

How to Start Investing in the Stock Market


If you want to make money without getting a job or if you want to start saving for retirement, you should invest.  If you want to make a lot of money investing, you should invest in the stock market.  You can lose money in the stock market, but typically the stock market will make you more money than bonds.  Making more money is our goal here.

First, you need money.

Believe it or not, you need money to invest money.  There are several different ways you can get this money.  The first way is the easiest way, save the money you already have.  It’s easy to spend and much harder to save for most people.  Here’s a very simple action you can take to save money.  Whenever you buy something you don’t absolutely need, decide if you would rather have that item, or have more money.  Passing up the item means you will save the money, invest it, and make more money.

Another way to get money to invest is to make more money.  You can work overtime, get a second job, start a side business, sell stuff at a yard sale or on Ebay, or do anything else that will make you more money.  If you like to spend money and don’t mind working more, this might be the path for you.

You need to do your research.

You can pick random stocks to invest in, but you are increasing your chances of losing money.  Don’t make blind investments, do your research.  There are two main ways to research a stock through either fundamental analysis or technical analysis.  Fundamental analysis entails reading annual statements and studying financial statements.  You look at the fundamentals of a business, where it’s been and where it’s going, to decide if it’s a potentially good investment.  Technical analysis involves studying charts of past performance and using that information to choose investments.

You could use either type or both together, that is up to you.  What is important is that you have a plan and a reason to buy the stocks you are buying.  If you blindly choose stocks, there’s a chance you’ll choose all stocks that are about to go under that if you had researched them beforehand, you would have known better.  Use common sense and a little bit of your own intelligence when investing.

In addition to researching your stocks, you will want to plan an investing strategy.  Are you going to trade frequently or are you going to buy-and-hold?  If you are looking to invest for retirement or are just trying to increase your wealth but you’re not financial savvy, you will probably want to spring for a buy-and-hold strategy.  This means you buy a few stocks and hold them long term, not selling for at least six months.  This is a much easier strategy because you do not have to keep an eye on your stocks everyday or constantly worry about them.  Sticking it out for the long-term means riding the stock market waves up and down and waiting for the high long-term return rather than catching short-term gains.

Find a Brokerage Firm.

In order to buy stocks, you need a brokerage firm.  When you are ready to buy a stock, you place an order with your firm, and your broker buys the stock for you.  They usually charge a fee.  A full service broker will charge you more, but you’ll get more such as stock advice.  You could instead get a discount broker where you get little more than the stocks you order, but you get it all for a much cheaper price.  If you feel you need the benefits of a full service broker, than go for it, otherwise, you might as well save some money.

In this technical day and age, brokerage firms have expanded onto the internet.  This has allowed new firms to emerge with deep discounted prices.  Sharebuilder only charges $4 per trade which is an incredible bargain.  For the beginner investor, I highly recommend Sharebuilder if you want to invest your money not spend it all on fees.

Place your trades.

Once you have money, have researched and chosen your stocks, and are set up with a broker, there’s nothing left to do than place your trade.  This is the last step to get you started, but it’s far from the last thing you will do to start investing.  You need to continue to watch your stocks, do your research, invest more money, and maintain your investment portfolio.

More articles on stock investing made easy:

Diversify your Portfolio - Don’t put all your eggs in one basket.

How Does the Stock Market Work? -Know where your money is going.

How to Buy Stocks - Find out how to start building your portfolio.

Do Your Research: Stock Market Research – You must do your homework first!

How to Find a Good Stock Investment - Where can you find the right stocks to buy?

Stock Market Investing Basics – Know the basics first before you jump into anything.

Develop a Stock Investment Strategy – Have a plan ready.

How to Buy Stocks Online -Find out how to save money by buying online.

Is Stock Buying for You? – Are you really cut out to be a stock investor?