How to Start Investing in Stocks 101

You’ve stored up some extra income. You wanted to find a way to invest your money to make it work for you. You researched a bit and found the stock market. You decided it seems like it could be a good fit for you.

But you had no idea where to start.

So you searched on google, “How to start investing in stocks?”. And then you clicked on the link that sent you here. And then you read this useful article on stock investing. Then you put your new knowledge into action! Building up a stock portfolio that will give you passive income for the rest of your life.

Well... That can be you in about 9 minutes if you read through this post on stock investing.

What is stock investing?

So the quick rundown on investing in the stock market is-

You open up a brokerage account, you fund the account with some money, you then buy stock/s in a company/group of companies, and then that company will pay you quarterly via dividends (usually). Then boom you start making a little return on your money, while chilling with your toes in the sand.

Okay that was a bit oversimplified. But basically you are investing into companies, by buying stock in them. So you essentially own a portion of the company. And since you own a bit of the company, most will pay you out with quarterly dividends based on how much stock you have bought in them. Resulting in passive income.

What is a brokerage account and how to open one?

A brokerage account, or securities account as it's sometimes called, is an account that holds financial assets such as securities (stocks, bonds, mutual funds, ETF’s) on behalf of an investor with a bank, broker, or custodian.

Your first step into your stock market passive income journey is with a brokerage. You need to go search around online for a brokerage that looks appealing to you. This will be your base of operations for growing your wealth passively. Here you will be able to put money into the account, look at and research stocks, buy them, sell them, and pull out your profit without any fees. (Note: Some brokerages require a certain deposit to even open the account)

A few things to note when choosing your brokerage is:

• Do they allow partial stock buys?

• Is it commission free?

• And do they require a certain deposit amount to open an account?

Funding your Brokerage Account

After having opened your investment account of choice, you will need to deposit some money into it. The amount of money you want to deposit depends on your own circumstances. You can start with 10 bucks (with partial stock buys), but a good starting point I would say would be $1000, this lets you buy a good amount of stock to start off your journey.

The more you invest at first, the more dividend income potential you have. And the faster your portfolio will grow. Constantly investing into stocks is the key to growing up a big enough portfolio to live off of.

ETFs vs Individual Stocks:

An ETF is a collection of stocks. The benefits of this is that it instantly diversifies your incomes and will almost always slowly grow your income. (annual return of the S&P 500 ETF is 7-8% over its history). ETFs will be your best friend when wanting to do a buy and hold strategy. It is the “safest” way to invest in the stock market historically speaking.

The S&P 500 in particular is the collection of some of the biggest 500 companies in the world, And if one tanks for whatever reason that's only 1 out of 500 stocks, so your investment isn't in jeopardy.

Unlike ETFs, Individual stocks are just one company that you are investing in. So this means if the company goes bankrupt after some poor financial decisions. And you weren’t prepared to pull your investment out. You could potentially lose a ton of money.

So basically just go buy ETFs unless you want to watch the news and market, and do research.

Invest your money from the account into a stock:

So after you have decided which ETF/s you would like to invest in. You will go into your brokerage account- and then purchase some stock, with the money you put into the account.

Congratulations! You now own a tiny portion of hundreds of companies. It’s time to put “I own a part of google” in all your bios- all jokes aside, the hard work is over.

You will want to repeat this step several times in order to diversify your income over different ETFs to keep your investments nice and safe.

Buy and Hold Strategy:

Your next steps are really easy actually. You do absolutely nothing. You forget about that ETF you just invested in. You let your new money baby grow on its own. Do not under any circumstance sell your stock.

This strategy is called “buy and hold”. And it stays true to its name. Basically buy and hold means that you buy a stock and hold it for a long period of time, and continuously reinvest your dividends.

This allows your investment portfolio to continuously grow on its own until you are ready to retire.

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I wish you the best of luck in your passive income, investing journey with stocks! Thank you for reading till the end!

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(Disclaimer: I am not a financial advisor any and all investment information here should be considered for entertainment purposes, and shouldn't be acted on without consulting with a financial advisor.)