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Investing in the stock market is one of the most passive ways to make money. If you are not sure where to start then continue reading and I hope I could show you the steps to start investing in the stock market.
With investing in the stock market you make your money work for you and make your money grow more money. It is like planting a money tree.
There is risk involved in investing and everything I lay out here is my opinion and what I have done to start investing. I am no expert and I am just a beginner and a regular folk just like you sharing what I have learned and observed.
Only invest money that you don’t need right now. You will need to hold your investment for at least 5 years to give it time to grow and bring in more income.
First Step To Investing In The Stock Market
The first step is to have income. Invest in your knowledge and skills to earn more income.
Income is your number one tool to invest, without income you cannot invest in anything. The more income you have the more you can save to invest.
Plan a budget and get rid of debt, debt especially credit card debt has very high interest rates. Get rid of debt as fast as you are able.
Build an emergency fund. Use your income to build at least 6 months of liquid cash to cover your expenses in case of emergencies and lay offs. Put your cash in a high yield savings account to earn higher interest and put more money in your pocket.
With all of these you are now ready, these are just optional, you can start investing a small amount while doing all the other stuff above. It is just better if you can get all of those out of the way when you start investing.
As an example: you can cut on your morning coffee of $7 and start investing that money every day. Figure out your way to start. Generally the earlier you start the better.
It will take discipline to follow the budget plan and make sure you are on your way to building more wealth.
Step By Step Investing For Beginners
- Open a Brokerage account
There are multiple brokerage accounts out there. You can choose any one that makes sense for you and generally these accounts are more or less the same.
The one I started with was with Robinhood for mainly 3 reasons:
First was at the time of joining and creating my account, Robinhood offered no commission fees for every trade that I made. Some brokerage accounts charge a fee if you make trades like buying and selling stocks.
Second was the free stock that Robinhood offered to all new investors that decides to use their platform. Use my link below to create a Robinhood account and link a bank account to earn your first free stock.
>>Free Stock Link<<
Third was the ease of use, Robinhood has a mobile app and with this you can easily monitor and check your trading account on the go. You just need a phone and you can trade on the go if you have an internet connection.
Another bonus feature that I liked was you can automatically set an amount to invest as often as you would like. This makes investing an automated process and makes it more passive.
Also, Robinhood offers margin trading meaning you can trade right away while your cash is still on the way. When you transfer an amount to your Robinhood balance from your bank instead of waiting for the transaction to clear. You can immediately use the funds to invest while waiting.
- Dollar Cost Average
With a budget already made, you now should have an idea on how much you can put aside for investing every day/week/month. Depending on how often you would like.
Never time the market, always put in some money as consistent as you can. Do your best to consistently put money in.
You should be able to set this up in your brokerage account to transfer money automatically. This feature is available in Robinhood.
- Choose Top Quality Companies
One of the hardest decisions is choosing which stocks to buy into. For me, I choose big companies or companies that are well known.
I also buy shares of companies that I use like AT&T and Bank of America. I make sure they are well known companies with low chance of going out of business in the years to come.
I also buy stocks with dividends. Dividend is money that a company gives back to their share holders.
A quality company giving out dividends is a good sign that the stock or the company is doing well. Especially if they are able to continually increase their dividend without loosing too much stock value.
- Diversify
On the same note that it is hard to pick individual stocks yourself. I’ve found a way that professionals pick out the stocks for you.
And this is through investing in ETFs or Exchange Traded Funds. ETFs are basically composed of a basket of different stocks that the pros have already picked out to track a sector or an industry of the stock market.
There is an ETF that tracks the S&P 500 which contains the top 500 stocks in the United States.
There is an ETF that tracks the total stock market. There are ETFs that tracks specific industries like healthcare, technology, real estate and etc.
The stock market has always gone up in value an average of 8 to 10% every year.
Diversification lowers your risk of loosing money as you don’t have all your eggs in one basket. A stock that is doing well can compensate for a stock that is going down in value.
Conclusion: Stock Market For Beginners Step By Step
This is how I started investing in stocks. Hopefully everything made sense and I have inspired you to start investing for passive income today.
The stock market is volatile and short term it goes up and down. Long term the stock market has always gone up and that’s why I am investing.
I made sure I had income as it is the primary tool to building wealth.
I have picked a brokerage account which is where I will do all my stock trading. I also made sure to dollar cost average every month, pick top quality stocks with dividends, and made sure to diversify through high dividend ETFs.
Please do your own due diligence in researching if investing in the stock market is a good fit for you. If in doubt, consult a pro.
I’d love to become a long term investor and make investing as passive for me as possible. Anything I can automate, I would set it up.
If you’re interested in a getting a free stock, Robinhood will give you a free stock when you open up a new Robinhood account using the link below, link a valid bank account and get a free stock today.
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