When I was a stockbroker, I commonly saw people holding back from investing. Whether they had little money or didn’t know where to start the result was the same – they were not actively trying to grow their wealth. Most people I spoke to did not invest because they were overwhelmed.
They simply did not know where to start. Thinking it was too hard, they held back telling themselves they would start someday. It does not have to be that way. In fact, investing in the stock market can be relatively simple if you have the right mindset. This mindset, when added to a long-term view of investing, will set you up for success.
Start Saving Your Money
It’s not really a shocker, but you need money to invest in the stock market. This can be a challenge if you’re a recent graduate or are paying off debt, but you can do it. Examine your budget for opportunities for savings.
This could mean cutting back or finding ways to make extra money. Determine an amount you want to start with and set a goal to reach it in a specific time.
Do Your Homework
There are thousands of options to consider when it comes to investing. This can overwhelm you if you’re new to investing. Don’t let that hold you back. Just as there are many investment options, so there are resources to help you start investing in the stock market.
Even better, most of these options are free to use either online or through your employer’s 401(k) plan. These will provide you with a good base of knowledge to start. That knowledge is invaluable as you start investing.
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Pick Somewhere to Invest
Now that you have some money saved and a knowledge base to work with, you need somewhere to invest. You should consider two options – your employer’s 401(k) plan (assuming they offer one) and an online brokerage. If your employer offers a match of your contributions, take it! It’s free money.
There are many online brokerages with which to invest. Don’t let the number overwhelm you. Rather, take the time to find one that meets your needs. Going back to the homework aspect, many of the best online brokerages offer free educational resources. Make sure to use the resources of the brokerage you decide on as they’re there to help you learn.
Come Up With A Plan
When you invest, it’s best done with a plan. Just like a budget can help you make decisions on how to spend your money, an investment plan can help direct how you will invest. This will require some thinking on your part to determine what your goals are for the money. Below are some of the common goals new investors have:
- Starting to save for retirement
- Be able to buy a house in the near future
- Saving for college expenses for a young child
There are many more motivations to invest, but you get the point. Determine what your goal is and formulate a plan to meet that goal. This will help separate emotions from your investment decisions and base your action on quantifiable goals.
Don’t Be A Stranger
Once you start investing you might think you can set it and forget it. There is a fine line between thinking long-term and simply forgetting your investments. The former will serve you much better over your investing years.
That being said, you will want to check in on your investments on a regular basis. The exact interval will depend on your goals and needs. That might mean once a month, once a quarter or twice a year. Whatever it is, make sure to do it to stay on top of how your investments are doing. This isn’t to say you’ll need to do anything, rather simply check in. If you do that and ignore the white noise of the media that tells you to do this thing or that you’ll set yourself up for greater long-term success.
Investing in the stock market can be overwhelming, but it doesn’t have to be. With a simplistic approach and the correct mindset, you will begin to grow real wealth over time.