Investing in Stocks for Beginners
It is never too early to begin investing. Why not today? In this blog post, you will learn three steps to start investing.
The first thing is first, evaluate your finances.
Are you already saving a portion of your income? If not, that is the first priority. Determine where you can cut expenses or increase income to put a portion of it to the side.
Here is a common allocation for your income:
– 10% saved
-40-60% for financial obligations (rent, car payments, food, etc)
-20-30% Recreational money
The exact amounts are going to be determined by your unique situation.
Step two is setting up a method of investing in stocks.
There are many options out there to choose from but here are some low-cost platforms you can use recommended by financial expert Ramit Sethi in his book I Will Teach You to Be Rich.
Both of these companies offer no fees and are easy to create accounts to get started investing your money. Vanguard was founded on the idea of making investing low cost for users. Charles Schwab offers a brokerage account when you open a regular checking account. Plus, you get the full customer service experience from both companies to help you through the process.
Step three is actually investing your money.
There is a lot behind the scenes of choosing the best companies to invest in. To simplify it, the best advice is to invest in fundamentally sound companies.
Think of companies that have:
-Strong customer loyalty
-Growing and/or stable industries
For example, Apple, Microsoft, Disney, and Adobe.
Companies like these are consistently on an uptrend so you do not need to panic when their stock price decreases. It will almost always reverse.
One final tip about investing: stocks move in waves, uptrends, and downtrends. Investing is playing the long-term game. You do not need to take your money out every time a stock price drops. Investments are meant to stay in the market for 3-5 years minimum. When the stock market goes down, it’s time to buy more stocks. When it goes up, be grateful your money is making more money.
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