Shock of Picking a Stock
Investing for the first time is like learning a new language. There are new acronyms, symbols, and confusing vocabulary that can leave you overwhelmed and frankly a little defeated. However, with a little guidance and some easy steps, you can be on your way to investing in stocks for the first time.
1. Pick a Platform
Investing in stocks for the first time requires picking a platform. Today, you are able to open up a brokerage account from the comfort of your own home with a computer instead of calling up a broker. However, this requires first choosing what platform you want to use. Click here for a review of pros and cons of each platform.
2. Establish an Account
Once you have picked a platform that is user-friendly, the next stage is creating a brokerage account. You can easily set up an account in under 5 minutes and decide how you would like to fund the account. The easiest way to do this is to link your brokerage account to your bank account so that you can add money directly. You can add money to your account without it being invested in an actual stock. It sits in a holding place called a "cash position" or money market fund until you decide your investments.
3. Choose an Investment
Stocks are a portion of a company and when you buy a share you become a part-owner in the company. Stocks are represented as a ticker-symbol that may have three to four letters. For example, if you want to buy a share of Google, instead of typing in Google you would search for GOOG. Once you are on the company page look for things such as the annual report. That will give you a starting place to the overall health of the company. Search for companies that you understand and that you would like to own.
4. Share Amount
Next, decide on how many shares you would like to purchase. You need to look at the share price to determine how many shares you can afford in your price range. If you are looking to invest $500 and the share price is $32 you would want to buy 15 shares. Remember, stock price changes all the time so that dollar amount may increase or decrease depending on when you placed the order to buy.
5. Be Patient
As a new time investor, it can be incredibly frustrating. Be patient with yourself and choose one stock to start with. You have years to create a great portfolio but for now you are learning the basics. Remember that you can gain or lose money at any time in the stock market. Be conservative in the amount that you invest to start and once you learn more you can add more to your portfolio.