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Investing in the stock market is an excellent way to build wealth. However, there is a learning curve, you can’t just jump in. You have to learn how to do it right that might be difference between making and losing money on the stock market.
Many years ago, saying someone is an Investor or a Stockbroker will conjure up images of elegantly-dressed men with briefcases and fancy cars. Thankfully, that is no longer the case.
The truth is, in today’s world, anybody can be an investor. You don’t have to be rich or be employed with a big Wall Street money management firm to be an investor. You can be an average joe working a minimum wage job and be an investor. You can also be an unemployed college kid or stay-at-home mom and be an investor.
Technology has democratized the investing process so much so that you no longer have to “call your licensed stockbroker” to “place a trade” on your behalf. You can place your trades from the comfort of your home, using just your smartphone.
You don’t need to have millions, thousands, or even hundreds of dollars to start investing. There are many apps out there that make it possible to start investing with just $1!
If investing with just $1 blew your mind, keep reading for more useful information.
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What Is Investing?
Investing is the act of putting time, effort, and resources into an endeavor or project, with the hope of getting a predetermined outcome. That is a general definition of the word “investing.”
What Is Stock Investing
In the paragraph above, we defined investing in a general context. But what is investing in the context of the stock market? In other words, what is stock investing? Well, I’m glad you asked that question because that’s precisely why we are here.
Stock Investing is the process of buying ownership in a company. When you purchase the stocks of a company, it entitles you to a portion of that company’s income and assets. You are part-owner of the company, and if the company makes money or the value of its stocks appreciates, it should translate to cash in your pocket. The inverse is also true.
Stock Investing is the process of buying ownership in a company.
Who Can Be An Investor?
The short answer is, anybody can be an Investor. If you are eligible to open a bank account, you can also open an investment account and start investing in the stock market. Investing is no longer reserved for the elite.
Today, thanks to technological advances, anyone can start investing by downloading a simple investment app on their smartphone. There are many excellent investment apps out there from which to choose.
If you don’t have a smartphone, you can still start investing on your computer with the aid of some very intuitive software or websites. There are also Robo Advisors that provide automated investment advice also.
Now that we know that anybody, age 18 and above can download an investment app and start investing, let’s delve into the nitty-gritty of investing in stocks.
Click below to get a FREE stock in companies like Apple, Ford, or Sprint
What Is A Stock?
Now that you know that you are eligible to invest, it’s time to learn what a stock is. According to Investopedia, a stock is a type of security that signifies proportionate ownership in the issuing corporation.
In other words, stock represents your share of ownership in a company. Companies sell stock on a stock exchange, and anyone eligible to open a savings account or a checking account is also eligible to purchase stocks.
Though stocks are top-rated investment products, they are not the only products for investing. You can invest also invest in Options, Exchange Traded Funds (ETF), Mutual Funds, Futures, Forex, Margin Trading, Bond, Fixed Income, Certificate of Deposit (CD), and other investment asset classes.
As you can see, there are a lot of avenues into investing. However, for simplicity, we are going to stick to stocks.
How Does Stock Trading Work?
Stock Trading is when you buy a stock at a lower price, hold it until the price goes up, and then sell it. Your profit will be the difference between what you paid for the stock and the amount for which it was sold. Anybody can start doing this for free by opening a brokerage account.
Here are some of the best stock trading companies:
Kinds Of Stock Traders
There are several kinds of stock traders. There are long term traders, intra-day traders, short-term traders, high-frequency traders, swing traders, positional traders, quantitative traders, and many more.
If you are new to investing in the stocks market, your best bet will be to start as a long term trader. Being a long-tern trader means you will hold your stocks for months or even years, and then sell when the price goes up significantly.
By the way, you don’t necessarily have to sell your stock to make money. Some companies pay dividends to their stockholders when they make a profit. You can hold your stocks and just opt to receive dividends. That’s a viable way to make money on the stock market.
Benefits Of Investing In The Stock Market
So why should you invest? You should invest because investing is a viable and easy way to build wealth, especially if your investment strategies are sound.
Think about it; most savings accounts will pay less than 1% in interest. The most generous interest-paying savings account will pay less than 3%, and they are very rare to come by, if they even exist.
But as an Investor, there is no limit to the amount of money you can make. The value of individual stocks will rise and fall, sometimes daily. But in the long term, the stock market tends to increase in value. It is, therefore, a better option than putting your money in a savings account.
Most successful investors tend to have a diversified investment portfolio. What this means is they spread their risk by investing in several different companies and investment products.
Best Time To Start Investing.
There’s never a “best time” to start investing. My advice is that you start investing now, especially if the stock price of your target company is currently low. It is common for a stock price to fluctuate, but the best time to get in is when the price is down.
Most investment apps will give you a historical analysis of a stock price. Studying the historical trends of a stock price will give you some perspective about how that stock will perform over the next few weeks, months, or years. Arming yourself with this information can give you an idea about your probability of making money on that particular stock.
Of course, stock performance history is not the only thing to consider when planning to invest. You also have to look at a host of other things like the company’s financials, their products, management team, their reputation, and many other performance indicators.
If you are satisfied with your research into the company, the next thing should be to pull the trigger.
You can start investing by opening an account right here or with any of the investment apps below:
Why You Should Start Investing Now.
It takes time for an investment to grow. It also takes time for compound interest to accrue a significant value. If you start investing now, you’ll have enough time for your investment to mature.
Also, since the value of stocks tends to increase over time, it’s better to start now. A year or five years down the road, you’ll realize a considerable return on your investment.
Get FREE Stocks!
Now that you know how to invest, why not start by opening an account with Robinhood and getting some free stocks? If you are interested, click the button below.
Open an investment account with any of the investment companies below:
The post How To Invest: What You Should Know About Investing In Stocks appeared first on WholesomeWallet - Get Better With Money.