Investing Basics: What You Need to Know to Get Started

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The term “investing” is used a lot to describe things that you might find a bit daunting. However, investing doesn’t need to be some mysterious thing that’s just reserved for people on Wall Street. Investing can work for anyone to help them get their finances in order. Think of investing as putting your money to work. A good investment allows a small amount of money to grow over time into a cosiderable nest egg. The most common form of investing is purchasing stocks in a publicly-traded company. Depending on the kind of investor you want to be, there are tons of options for how you can grow your money.

What Kind of Investor Do You Want to Be?

Take stock of your personal finances and figure out how much you’ll be able to invest each month. Maybe you’ve got a little bit of savings set aside and you can invest a few months of income into a stock portfolio. Or, maybe you’re able to spare $20 out of your weekly pay, and that’s what you’d like to start with. The decision you make will likely affect how you think about your investment. If you sink a considerable portion of your savings into your investments, you’ll probably want to be pretty active with your stocks. You might keep up with the daily movement of the stock market to see when your stocks are valued highly in order to sell them for a profit. If you’re just investing $20 at a time, though, you might prefer to go with a slower, safer investment. A hands-off approach is just fine if you’re investing in stocks that are stable and slowly grow just above the rate of inflation.

How to Invest

The odds are good that you’re likely not going to be using a traditional full-service brokerage for your basic investing needs. There are numerous online brokerages that offer small fees or no fees for trading and investing, making them perfect for beginners looking to get started investing. These services even offer some articles and other materials to help get you started. These brokerages have a vested interest in you continuing to use their services since they make money whenever you’re using them. As such, they want you to be well-educated in how to manage your money. The most common investment account for the beginner to get started with, however, is a 401 (K) account through their employer. Setting your monthly contribution to just max out your employer’s match is a great way to passively grow your retirement finances without noticing the sting on your paycheck. However you choose to invest, just make sure you’re consistent with it, and you’ll likely see strong returns in no time!