Learning how to invest starts by learning how to invest in stocks, and historically the return on stock investments has exceeded many other assets, making it a powerful tool for those who want to grow their wealth as your investment journey begins with learning how to buy shares.
Different ways to invest in stocks
The authors, E. Napolitano and Aaron Bruerman in their report published by the American magazine “Forbes” (Forbes) that there is more than one way to invest in stocks, as you can choose any of the following methods or use them together , and the method of buying shares depends on your investment objectives and the extent of your active participation in the management of your investment portfolio.
aTo invest in individual shares: If you enjoy researching and reading about markets and companies, buying individual stocks will be a great way to start investing, and even if the share prices of some companies seem a bit high, you can buy partial share if you are just starting out and have only a modest amount of money.
Investment in mutual funds: ETFs buy many individual stocks to track the underlying index, as it is similar to buying stocks from a very wide group of companies that are in the same sector or that include a stock index, such as the Standard & Poor’s 500- index (S&P 500). , and the fund’s shares are traded. Shares are like stocks, but they offer more variety than owning an individual stock.
Investment in mutual funds: Mutual funds share some similarities with ETFs, but there are important differences. Actively managed mutual funds have managers who choose different stocks in an attempt to beat a benchmark index. When you buy shares in a mutual fund, your profits come from dividends, interest income, and capital gains. Money and low-cost index funds are mutual funds that work like ETFs.
The authors explain that there is no right or wrong way to invest in stocks. Finding the best mix of individual stocks, ETFs and mutual funds requires some trial and error as you learn to invest and your investment portfolio to build.
Choose how to invest in stocks
The authors said that there are a variety of accounts and platforms that you can use to buy stocks, as you can buy stocks yourself through online brokers or you can hire a financial advisor or an automated advisor to buy them on your behalf. , and the best way is the one that matches the amount of effort and guidance in which you invest The process of managing your investment.
Open a brokerage account: If you have a basic understanding of investing, you can open a brokerage account online and buy stocks, as a brokerage account puts you in the driving force when it comes to choosing and buying stocks.
Hire a financial advisor: If you would prefer more advice and guidance for buying stocks and other financial goals, consider hiring a financial advisor. They help you set your financial goals and then buy and manage your investments for you, including buying shares. Financial advisors charge fees, which can be fees A fixed annual fee or fee per transaction or a percentage of the assets they manage.
Choose an automated advisor: Auto advisors are a simple and inexpensive way to invest in stocks, most robo advisors invest your money in various ETFs, buy assets and manage the investment portfolio for you, usually they are cheaper than financial advisors but you will rarely get the benefit of a living person It answers questions and guides your choices.
Use a direct stock purchase plan: If you prefer to invest a small number of shares, many blue-chip companies offer plans that allow you to buy their shares directly, and many programs offer commission-free transactions, but may require other fees when you sell or transfer your shares.
The authors said that no matter how you choose to invest in stocks, at some point you will probably pay a fee to buy or sell stocks or to manage the account, so pay attention to fee and expense ratios in both mutual funds and ETFs, and do not be ashamed to ask for a fee schedule. Or talk to a customer service representative at an online brokerage firm or an automated advisor to inform you about fees you may incur as a customer.
How do you fund your account?
According to the authors, you need to set clear investment goals, then decide how much of your monthly budget you want to invest in stocks, and then you can choose to manually put the money into your account or set up recurring deposits to hold your stock. investment objectives on rate.
Here are some things to keep in mind when setting up an investment and financing budget for your account:
Minimum purchase of a mutual fund: Many mutual funds have minimum purchase amounts to start with, so make sure you explore different options – Globe Investor is a great resource – to find low or minimum options to start investing in stocks as soon as possible.
Trade Commissions: If your brokerage account charges a trading commission, you may want to consider growing your balance sheet to buy stakes – especially individual stocks – so that the commission represents only a small portion of your invested dollars.
Mutual fund fees: When buying a mutual fund, make sure you check the fees on the shares you buy, as some mutual funds have pre- or resale fees that are determined when you buy or sell shares.
Start investing in stocks
If you choose to work with an automated advisor, the system will invest the amount you want in a pre-planned investment portfolio that fits your goals. You go with a financial advisor and he will buy you shares or funds after it has been discussed with you.
When your order is successfully executed, the securities will be in your account and you will start enjoying the rewards of the stock market and you will start making profits, and you will face losses as the economy changes.
The authors pointed out that while initially buying stocks, consider signing up for a dividend reinvestment plan, which takes the profits you earn from individual stocks, mutual funds or investment funds, and automatically buys more stocks in the funds or stocks which you own. , and may eventually end up You can have partial shares, but it will keep more of your money in circulation and reduce cash, and if the company offers a dividend reinvestment plan, it can also offer a share purchase plan, which offers optional cash purchases of additional part free whenever you want.
Compile an e-wallet review schedule
Once you have started building a portfolio of stocks, you will need to set up a schedule to review your investments and rebalance them if necessary. Rebalancing helps ensure that your investment portfolio stays balanced with the right mix of stocks for your risk tolerance and financial goals. unbalance your asset mix, so regular registrations can help you make more transactions to keep your portfolio in good condition.
The authors conclude their report by emphasizing that it is not necessary to check your portfolio daily, so the monthly or quarterly schedule is good, and remember while reviewing your investment portfolio that the goal is to sell at a low price buy and sell at a high price. , investing in stocks is a long-term endeavor, and therefore you will see inevitable fluctuations as the economy goes through its usual cycles.