Home Finance A Beginner’s Guide to Investing in Stocks

A Beginner’s Guide to Investing in Stocks

Making stock market investments is a great way to grow your wealth. For those interested in long-term investing, stocks make a good option even during periods of volatility in the market, given that a market downturn simply implies that great stocks are likely to be available for sale at affordable prices. However, if you’ve never invested in stocks before, it can get a little daunting. Here’s an easy guide that will help you through the process.

Decide How You Would Like to Invest

If you think you’re someone who will enjoy buying and selling stocks, you’ll need to create an investment account. If you want someone to manage the process for you, you could opt for a Robo-advisor.

Open a Brokerage Account

A brokerage account is one of the least expensive and quickest ways to buy stocks and funds.

Understand the Difference Between Mutual Funds and Stocks

Before you purchase any stocks, it’s important that you first understand the difference between mutual funds and stocks. Mutual funds allow you to purchase small pieces of multiple stocks in a single transaction. But, if you are interested in a single company, you can buy a single share or multiple shares in the company.

Set a Budget

It’s important that you set a budget for yourself before you start investing. Remember to not invest any money that you need in the short-term. For instance, don’t invest the money you’ve saved up to pay the down payment of a house you will be purchasing in the next couple of months.

Think Long-Term

It’s important to pick stocks that you think will excel in the long-term. You can choose the right stocks by doing some preliminary research about different companies. And, unless you are trying to be a day trader, avoid checking the performance of your stocks every day.

Manage Your Portfolio

Fretting about daily changes to the price of your stocks is not great for the health of your portfolio (or even your own for that matter). But, of course, you’ll want to check your stocks from time to time and make changes to your investment allocation whenever required.

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