When it comes to investing getting started is half the battle.
As a new investor you have all kinds of fears. It’s hard to get started. You don’t have enough money to start. You don’t know what you’re doing or where you should even open up an account.
The good thing is once you get started all these fears go away.
Here are five lessons learned from a new investor.
Investing is Easier Than You Think
Anything that is new seems intimidating. But when it comes to investing, those fears have absolutely no merit.
Since I’ve started investing I’ve played around with two different investing platforms. And both of them were insanely easy to get started with. Since I had my savings account with Capital One 360 I went ahead and opened up a Share Builder account and bought my first stock. This was the easiest place for me to start. Now that I know what I do and don’t like, I can look for a platform to better suit my needs.
However, the biggest thing that kept me from getting started was thinking I needed thousands of dollars to invest. This simply isn’t true. You don’t have to have a ton of money to get started. In fact you start investing with as little as $10 – even with retirement accounts.
I started with a couple hundred dollars and have added another couple hundred to my account each month since then.
Don’t Start with Penny Stocks
Want a sure fire way to kill any investing bravery you’ve mustered up? Buy penny stocks and watch them lose half their value!
My first stock purchases were two different penny stocks. I thought I had a brilliant idea and was going to see a sky high return on my investment. And at one point one of my picks nearly doubled. Then days after it was only worth half of what I paid. Both of my penny stocks now sit in this position.
There are some people who have managed to make a living out of day trading (buying and selling stocks while constantly monitoring them) but if you’re just getting started this is not the way to go.
I’ve now been purchasing dividend stocks instead of penny stocks. Dividend stocks are a far safer bet.
Watch for Fees
When it comes to investing, fees can be plentiful. Most retirement accounts have some sort of fees associated with them as do buying and selling individual stocks in a personal investment account.
Think about it. If you want to buy stock for $100 and you pay $7 to purchase the stock you’re immediately losing 7 percent of your money. That 7 percent will take a while to get back.
There are now fee free investing platforms popping up all over the place. For example, WiseBanyan is the world first free financial advisor – charging you nothing on your investments and offers a super low initial investment amount. This is where I’ll put my retirement accounts.
As far as purchasing individual stocks in a personal investment account you’ll need to do research to find a platform you trust that charges the least for trades.
The Earlier You Start the Better
If I’m going to be honest I’d say that investing is slightly addictive. It’s fun to put your money in the stock market and watch it grow. It’s fun to continually add to your investment accounts. It’s fun to know that you’re taking a step in the right direction when it comes to building financial stability.
And you’ve heard it before; the earlier you start investing the better.
Compound interest is paid on your principal and also the interest that you have accrued. And when you invest it works in your favor.
If you want to grow your money start investing now.
Read, Read, Read – Or Take a Course
There is a lot to be learned about investing. A lot of the learning will be trial and error. In my case – this was thinking I was going to make money on penny stocks.
The more money you have to invest the more knowledgeable you’ll need to be about what you’re investing in. Read investing books, blogs, or take a course on investing.
The more you learn the better decisions you’ll be able to make.
What fears do you have about investing? What hurdles did you have to overcome to get started?
Joseph Hogue says
Great post Alexa! I think your best advice is what you start out with, that getting started is the hardest part. Definitely going in my “Best of” roundup tomorrow.