Learning About Stock Investment – 5 Things You Need To Know

If you are planning on making your first investment, you are likely unsure where to start and what you should be investing in. In fact, the world of investing can often be confusing for the first time.

Luckily, it doesn’t need to be. To help you get started, we’ve outlined five things you need to know as a beginner stock investor.

Determine Your Investing Approach

Before you make your first investment, it’s essential first to determine how you will be investing. Do you want to try a more active approach? Or do you prefer to be passive? If you have several hours to spend on investing every week, you can buy individual stocks and eventually beat the market. 

However, if you’re not an over-analytical person, you can invest more passively through index funds, as these are guaranteed to match the long-term performance of their underlying indexes. You can also try RoboAdvisors, which invests your money for you based on your risk tolerance and investing goals.

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Decide How Much You’re Going to Invest

Next, decide how much money you’re willing to risk. Suitable investments take time, so make sure you’re using money that you won’t be needing in the next five years or so. 

This means that you should not be investing your emergency fund or money that is already allocated towards paying an upcoming expense, i.e. rent or tuition fee. Instead, allot some money specifically for stock investments.

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Open an Investment Account

Next, open your brokerage account. This step should be easy enough, but you should also consider a few points like which brokerage to open an account on or the trading platform to use. Compare costs and features, and find one that ultimately suits your needs and experience level.

Luckily, there are plenty of platforms that cater to beginner investors, like SoFi Invest. Investments can be intimidating for those that have just begun dipping their toes in the market, and SoFi Invest’s all-in-one investing app will help investors buy and sell individual stocks while paying zero commissions. 

If you need help learning how to start investing in stocks with SoFi Invest, more resources like this article are available on their site.

Choose the Stocks You’re Going to Buy

Once you have opened your brokerage account, it’s time to choose the stocks you’ll have. When selecting stocks, it’s essential to learn the concept of diversification or the advantage of having different stock varieties on your portfolio. However, it’s also important to only invest in solid businesses that you understand. 

Avoid high-volatility stocks while you’re a beginner as well, and steer clear of penny stocks. If you aim to be a passive investor, it’s best to stock in solid businesses that will eventually mature your money. If you’re investing in individual stocks, then it will also be helpful to learn how to reevaluate them.

Keep Investing

After you’ve made your first investment, keep investing! Buy shares of great businesses at reasonable prices and hold on to them until you profit. The key to investments is to keep doing it and improving each time. As per the experts at SoFi Invest, the key is to invest in long-term stocks, especially if you’re eyeing retirement.

Learning how to be a good investor takes time and patience. However, keeping these things in mind when making your first investment should give a solid foundation in what you need to know about the world of the stock market.