0

A Beginners Guide to Stock Investing in 5 easy steps

PUBLISHED Apr 6, 2022, 12:19:36 PM        SHARE

img
imgStaff Writer

A Beginners Guide to Stock Investing in 5 easy steps

Thanks to technology, everyone now has access to investing. In this article, we'll walk through 5 easy steps to start investing today.

Preparing to Invest

1. Preparing to Invest

Start Investing Today

Before investing, review your personal finances. New investors are more successful when they have a grasp of their personal finances. Managing your personal finances is easy and will help you start growing your wealth.

Even if your personal finances need help, you should still start investing today. Thanks to fractional shares, beginner investors can start investing with $25. Routine is very important in investing. Starting that routine now even if it's only $25 a month. You can invest more as you build confidence.

Setup a Brokerage Account

A brokerage account is where you conduct stock trades. Here are brokerages used by many retail investors:

FInding the right brokerage will keep your investment costs down.

Conducting Research

2. Conducting Research

Figure out what you're investing for

When you start investing, set a goal for what you want to achieve. The key objectives will fall into:

  • Rapid growth - You want to grow your assets quickly. The trade-off to reaching this goal is that the investments needed for rapid growth are more volatile.
  • Balanced Growth - You want to grow your assets quickly, but you don't want high volatility. This is a "goldilocks" strategy. Not too hot or too cold. The trade-off is less growth and less safety versus other strategies you could use.
  • Income generation - This strategy focuses on growing your income instead of your assets. You obtain income generation by investing in dividend stocks and bonds.
  • Wealth Preservation - You want the minimum amount of risk to beat inflation. This way your wealth holds its purchasing power. This strategy focuses on suppressing volatility, hedging risk, and insuring against market down-turns.

Research Stocks

To begin, read our guide on assessing stocks. This guide walks through how to analyze a stock with simple examples.

Next, research the stocks. Researching stocks is critical to building a quality portfolio. Some great resources are:

Check if a stock has a high or low P/E ratio, a dividend, and a stock buy back program. These indicators are a starting point when assessing a stock.

Invest in What you Know

Revenue is king. So which companies are making revenue? The companies you're buying from. The products you like get made by companies you can invest in. Here a few example companies you've like heard of:

McDonalds (MCD)

McDonalds is the most recognized fast food chain in the world. Did you know McDonalds pays a 2.24% dividend? That means if you invest $100 in McDonalds, McDonalds will send you money once a year to buy a shake. If you invest $10,000, they pay you a large enough dividend to buy 100 shakes a year. That's easily enough to buy a shake and fries every weekend!

Tesla (TSLA)

Tesla vehicles are in high demand. The company has made electric vehicles hip and cool. But if you're still saving up for your first Tesla, speed up your savings by investing in Tesla stock. Tesla is a volatile stock, but if you invest long term you can ignore the drama and reap the growth.

General Mills (GIS)

Are you eating your cheerios? It may help improve the health of your heart. These cereals are a staple in American life and produced by General Mills. A consumer staple, check out General Mills for something consistent in your portfolio

Make Trades

3. Make Trades

Diversify your Portfolio

Invest in at least 10 different stocks when you begin. To diversify your portfolio, use fractional shares. This allows you to have 10 different stocks even if you started with only $100. Diversification helps to manage risk in your portfolio. You do not want all your eggs in one basket.

Write Trade Instructions

In your brokerage account, go to the trade link. Enter in the stock symbol you want to buy. Change the number of shares until the total purchase is one tenth of your total investment. Set the trade as a market order.

Warning: if your stock is a small-cap or micro-cap stock, do not set a market order. These stocks have low volumes that must be managed with limit orders. Market orders are less risky if the stock is a mid-cap or blue chip stock.

4. Develop a Cadence

Review Portfolio Quarterly

One critical mistake made by beginner investors is to keep looking at their portfolios daily. Once you make a long-term investment, you should be in it for at least a year! Hence why the research step is very important. Review your portfolio quarterly. If you're using StockBossUp, be sure to assess your drafted team at this time as well.

Take Profit

5. Take Profit

One indication a stock should be sold is when you stop using a product they have. If you just don't like your vehicle, then you should sell any stock you have in that vehicle's company. If you switch to a competitor's product, consider buying shares in their company.

Stocks hold wealth, so do not feel pressured to sell stocks even after they significantly increase in value. Holding a company for years is also a good idea.

Tax Considerations

The hardest part of investing is selling your stock. There is no perfect time to sell a stock. We suggest selling at least one year after purchasing a stock to lower your tax bill on any gains you made.

Treating Yourself

Though not always possible, try to avoid selling stock for monthly costs. Again, not always possible. But treat yourself if you're investments are successful. Buy dinner out using your stock's dividend. Have your car stock buy your next car. The point of investing is to have the financial security to live a healthy and happy life.

Part of a Series for Beginner Investors



Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads
How to Protect Your Facebook Account from Hackers
Image

Have you ever received a friend request from somebody you were already connected with, only to see that person post an update that says, ‘don’t accept any friend requests from me, I’ve been hacked’?

How to Increase Traffic to Your StockBossUp Content
Image

StockBossUp is financial media 3.0. Our mission is to build user wealth using knowledge and technology. Content creators are the key to building this knowledge. In this article we'll share how content trends so that you can earn a share of our growing audience.

Strong But A Little Tired
Image

Market Commentary

Common Mistakes Made by New investors
Image

The biggest mistake new investors make is not managing the risk of their investments. The stock market is a money machine and not a slot machine. Watching for these common mistakes can improve your risk management and build wealth.

What are Safe Investments?
Image

Safe investments have a low possibility of loss. This safety comes with a tradeoff as the return on safe investments will be lower.

What are Risky Investments?
Image

Risky Investments have a high probability of loss. Risky investments may have a high upside, but not all risky investments are bad investments.

How do you Avoid Buying High?
Image

Avoid buying stocks at their high by monitoring the current market value and measuring the intrinsic value of a stock versus its current price.

Crypto’s Role in the Russian-Ukraine War: Everything you need to know
Image

It is not news that Russia and Ukraine are not on good terms, and the former head of the Soviet Union has gone to war with Ukraine over claims of allegiance with NATO. Russia has received a lot of backlash from the international community over this. In this article, we will be looking at how Crypto has played a pivotal role in the Russia-Ukraine war.

5 Ways to Promote Your Side Hustle Now
Image

A side hustle is a business opportunity that’s usually alongside of full-time employment. The great thing about a side hustle is that it can develop into an opportunity that allows you to quit your regular job and pursue that business entirely.

Yuga Labs Launches ApeCoin and DAO: Here is what to expect.
Image

If you have been in the crypto space as long as we have, we are sure you wouldn’t be alien to the Bored Ape Yacht Club and Yuga Labs. In this article, we will explore the ApeCoin, a token that was recently launched by Yuga Labs and what the future holds for the Bored Ape Yacht community.

New Investor Tips
Image

These new investor tips help to answer questions most new investors ask when they first start investing.

How Much Cash Should I Have in My Portfolio?
Image

You should not have any cash in your investment portfolio. Cash is a depreciating asset and its better to hold bonds, precious metals, or safe ETFs during market sell-offs.

Who Buys Stocks When Everyone is Selling?
Image

When everyone is selling stocks, market makers, traders, and long term investors are on the other side buying at lower prices.

Is it Worth Buying Less Than One Share?
Image

Buying less than one share is worth it. Fractional shares help retail investors jump into investing. But it's important to know what you lose when you buy fractional shares.

Should I Buy Red or Green Stocks?
Image

You should never buy stocks just because they are green or red. Let's explain why stocks are colored this way and why they should not effect you investment decision.

OK, but . . .
Image

Market Commentary

Best NFT Marketplaces to Buy or Sell Your NFTs
Image

NFTs are still causing quite the stir in the Crypto Industry as Bored Ape Yacht has decided to launch its own Token and its DAO. The NFT marketplace can make or break your art.

News Dominates the Markets
Image

market commentary

Resources for Publishers
Resources for New Investors
Boosted with BossCoin