Investing your money into the stock market is one way to have your hard-earned money work for you. It is a nice feeling to wake up in the morning and sees that your investment is bringing profits into your pocket. There are times when my investment do not bring profit but still I collect dividends and reinvest them.
This is going to be my beginner guide to How To Invest In The Stock Marker for FREE! Yes, I needed to add the word “free” because for starters it helps with my blog’s SEO, and secondly, I free like this is the knowledge that everyone should have for free. There are many people that are willing to take advantage of those who are willing to learn about the market, putting in the time and the effort just because the guy/lady on the webinar said you can “10X your money doing this or 100X doing that”. Then, these people pay good money to go to these webinars to listen to these “Guru’s Secrets”. Money that could have been invested instead.
From this blog post, you will:
- Leave with a proper understanding of the Stock Market
- Understand how the Market Function
- Basic beginner strategies I used to ensure a profit
The Stock Market
The Stock Market is considered one of the quickest ways to get rich but comes with the biggest risks. I think of it as a double-edged sword, it can either make you or break you. The Stock Market is a marketplace where you can go and buy parts of a public company at a current price. If the company is doing well then the initial investment will be greater than before, if not then your investment would either remain the same or go down.
When investing you usually do it through a Broker. A Broker is a person who buys and sells goods or assets for others, think of them as the middle-man that buys the stock that you want at that price. The trading platform that I am currently using and would recommend beginners to use is M1-Finance. They are a trading platform that makes trading stocks much more simple. If you want to buy Amazon but do not have the complete funds to do so, they allow fractional trading, meaning you can buy $1 worth of Amazon instead of the whole stock. The best feature is the reinvestment tool, they will automatically reinvest any profits for you. Try them out with the link above for a free $50 and there are no fees when opening an account.
Understand how the Market Function
At first, glance trying to understand how the Markets works can be tricky for most beginners. I remember when I first laid eyes on it for the first time in my life, looked so stressful. Once you start to get a proper understanding of what certain words and numbers mean, that is when you start to have fun.
The stock market works through a network of exchanges, you might have heard about the S&P 500 before or at least seen it. Companies list shares of their stock on an exchange through a process called an IPO, initial public offering, or general asking price.
That supply and demand help determine the price for each stock and a decent price for investors and traders that are willing to buy or sell.
Buyers offer a “bid,” or the highest amount they’re willing to pay, which is usually lower than the amount sellers “ask” for in exchange. This difference is called the bid-ask spread. For a trade to occur, a buyer needs to increase his price or a seller needs to decrease hers.
This all may sound complicated, but computer algorithms generally do most of the price-setting calculations. When buying stock, you’ll see the bid, ask, and bid-ask spread on your broker’s website, but in many cases, the difference will be pennies, and won’t be of much concern for beginner and long-term investors.
Basic beginner strategies I used to ensure a profit.
This is how I invest in stocks. I simply look for long-term growth and a safe return. I am a college student busy with school and keeping up school funds, I surely do not have the time to trade stock 24/7 or have the time to sit and worry about whether or not I made a good investment.
So what I do is take some time out of my day and look at my weekly budget. Take no less than 10% of what makes to invest, if I could invest more then I invest more, but no less than 10%. With M1-Finance they make it easy I was able to step up an automatic payment from my checking every time I get paid.
Now before you invest do research. I looked for companies that pay out DIVIDENDS, these are companies that pay you for having shares, sometimes weekly, monthly, or quarterly. I would recommend investing in a company with no less than 3% dividend yield and no more than 5%, because the higher the dividend percentage, the more RISK involved.
After you set up your budget and found your stock, all you need to do is keep adding 10% or more to it. Best to pretend that you do not even see it, to begin with. M1-Finance will automatically reinvest your profits for you. If you feel like you invested in the wrong stocks or you want to change out any stocks, I would recommend waiting 1 year + 1 day because of taxes, which saves you a few bucks.