Are you ready to buy your first stock?🤑
You can never start too early when it comes to investing and planning for your future. The longer you wait to begin setting funds aside the harder it’ll be to catch up to your peers. The greatest benefit to starting early is the compounding effect. I like to send my dollars out to bring back others. The first dollar would bring them back into your account in the form of dividends or interest.
Each person is unique and therefore will have a different level of risk they can tolerate. What I mean by level of risk is the amount of money you’re willing to lose in order to create a profit. Don’t put up $500 if losing it means you lose the ability to pay rent next month. Now I’m not telling you what stocks or funds (groups of stocks) to run out and buy. Conduct your own research and do so with the knowledge if poor decisions are made, a great deal of money could be lost. With the stock market especially, the price of a stock could be $89 per share at 1:00 p.m. then drop to $37 by 2:00 p.m. the same day. This could sting a tiny bit if you just owned the one share. Imagine if you had purchased 100 or more. 😱
If you’re interested in a safe option for your money you could leave it in the bank. The potential return on investment will be much less than other stocks or bonds. Some banks do offer services with the ability to purchase stocks or bonds using the bank as a brokerage. Be mindful of commissions. Commissions are the fees a brokerage charged to carry out the trade. This is charged for buying and once more for selling. I’ve seen them as low as $2.95 per trade to north of $9.99.
Personally, I don’t like wasting money on commissions so I do most of my active trading using Robinhood. . . for FREE. You read that right. Now read it again in Morgan Freeman’s voice. Click on the link if you’d like to poke around and see if it’s the right fit. Disclaimer: If you sign up we each get a free stock. 💁🏻♂️
You might be someone scoffing at the screen thinking paying per trade wouldn’t be an issue. Well, Robinhood sent me a shocking email at the end of 2018 showing how I saved $4,300 on would be commission costs.
Once you have a platform (company to trade through) you’ll need to know what to buy. Sure, logging in and looking at all the confusing jargon on the main screen is fun but we’re here to make some coin. Jot down 4-5 terms a day and while you’re bored ask Siri or her cousin Google to look it up and expand your vocabulary.
Once you have a comfortable enough understanding of the trading process you’ll need to choose what to buy! Yahoo finance is a great place to check out if you want the basic stock info with the option of pulling up the more technical piece of the puzzle. I suggest locating 20 companies which sell products or services you use frequently. Try focusing on stocks trading at less than $50 per share. You can bump up to varsity level stocks like Amazon when the account starts growing. Invest in businesses you understand As Warren Buffet, praise his name, likes to say. In other words, worry more about how the business performs as a whole over the long term. Once you’ve narrowed it down you could then focus on the price to see if buying would be a logical move. Shitty companies could sometimes be an expensive purchase.
Now that you’re happy with your list of 20, throw out half and keep the most preferred. If you were able to narrow the search down to stocks under $50 then you’ll be able to purchase 2 shares of 10 different stocks. Why not just pick one company and buy many shares? Don’t get me wrong you could, but it would be boring for a while babysitting only one. Having 10 is a good mix because it’ll teach you how the market moves as a whole. You’ll begin to notice how a rising tide lifts all ships. When the entire economy or market is going up in price the majority of stocks rise along with it or vice versa. Or how company news affects a stock price. Don’t worry about the difference between good or bad news because as you’ll soon learn, the market does not make sense and has been known to do the opposite of the expected result. Which is why I love when a great company’s share price drops after positive news. Buy buy buy. #Broker4Insync
By this point in the process you should have already learned the different types of buy and sell orders and are ready to begin. All 10 of the purchases don’t need to be made in one day or even the same week. Take your time and be sure about the price at which you’re looking to enter then execute! If you were lucky enough to choose companies which pay dividends you’ll start to collect small profits. Save up the dividends and use your new dollars to buy more! If you’d like to see how dividends could add up quickly check out this previous post. Only cool people will be able to click here. 😎
For any questions or feedback on any of the above please let me know down below. I don’t know what you don’t know, so if you don’t speak up we’ll both look foolish.