Beginners Buying Stocks by Finlay Lange

Author:Finlay Lange [Lange, Finlay]
Language: eng
Format: epub
Publisher: UNKNOWN
Published: 2020-11-17T00:00:00+00:00

CHAPTER 7

HOW TO START INVESTING IN THE STOCK MARKET

The stock market can definitely be your moneymaking machine if you do things right. But first, let me explain the procedure that is followed for making any investments in the stock market.

Step 1– Determine Your Financial Goals Before you put a single penny in stocks, you have to figure why you want to do this and what your investment goals are. You also have to perform an honest assessment of your current financial situation to be sure that you are in a place to accommodate this new activity. Some things that you should take into your consideration are as follows –

Assess whether you are going to have a stable income for the coming months or even years. If you have any heavy debts, consider clearing them first before taking any new endeavor. If you have any big family responsibility on your shoulders, like marriage or a newborn in the house, determine whether you have enough money to cover that.

Lastly, take your monthly household budget into consideration before you decide how much money you want to put aside for stocks.

After answering all the things that I just mentioned above, your task is to think about what your goals are– do you want to buy a house? Are you saving for retirement? Do you want to support your child’s schooling? When we are talking about financial goals for the stock market, it is better if they are for the long-term because, in the short-term, the risk of losing your money is much more.

Step 2– Open a Retirement Account If you are a beginner in stock market investing, then I would suggest that you start your journey by opening a retirement account like the 401(k) plan or any other equivalent of it. In case there is no employer plan, then you can also go with the IRA or Individual Retirement Account. These accounts are not only taxsheltered, but they are also allowing you to invest your money in the stock market until you are ready to do so directly.

Step 3– Choose a Stockbroker When you think you are ready to invest in the stock market on your own, the first thing to do is choose an online broker to suit your needs and also your budget because some of them might be giving you a lot of features, but they also charge hefty commissions. For starters, you have to understand that there are two types of stockbrokers – The first type is the full-service brokers who charge more commissions, but they are also quite comprehensive, and they provide you with tailor-made strategies. Investors who have enough capital go with these because they get extensively researched advice and also huge resources at their disposal.

The next type of brokers which most people use are discount brokers because their services are quite affordable, and you will be getting a platform to conduct the trades even though it is not as extensive as the ones provided by full-service brokers.

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