How do I invest in the stock market?
Hello,
I am a first year finance major at a university and I have been researching various types of investments. I am interested in investing some of my money in the DOW, S&P and Amazon. I do not know which brokerage firm is the best, or if ETF's are the best choice or how to even start investing. I was also wondering if I have a 'record' or portfolio on me once I start investing in the market, so how careful should i be with that in mind. I could really use some insight. Thanks. #accounting #money #investment-management #finance #stockmarket #business #investment-management
6 answers
Alex’s Answer
Yunqing (Meredith)’s Answer
Evan’s Answer
Hi,
I would recommend Vanguard because there are no fees for opening an account or trading Vanguard funds. Their funds have some of the lowest expense ratios (the percentage that you have to pay to the brokerage to manage the fund) available, so you get to keep more of your money. Most other platforms allow you to invest in Vanguard funds, but it might not be free to trade them elsewhere.
By "fund" I'm referring to ETFs. Mutual funds are very similar, but usually have large ($1k or $3k) investment minimums. ETFs allow you to invest in hundreds of companies at once- buying ETFs that are designed to track the indexes that you referenced (S&P, Dow, etc.) are a very safe bet because in the long run, the market will always go up. People who pick individual stocks for a living and spend 8 hours a day doing research have a very hard time getting returns that are better than the overall market return, so if you don't have that kind of time I would recommend going with a fund that is indexed to the entire stock market, the S&P 500, etc. This applies to almost all investors, new and seasoned, no matter how much you have to invest.
Kim’s Answer
Gianna,
Here is a link to some educational material from an organization that I invest through. This organization handles investments for Public Sector employees, but the literature will still be helpful.
I encourage you to read as much as possible! There is so much to learn! Stocks - large cap, small or mid cap? Growth or Value? International? Diversifying - holding not just different funds, but making sure they are invested in different sectors of the economy (tech/healthcare/retail). Learning about the funds - past performance, have they changed managers, etc? Expenses!!!
I have invested in mutual funds for many years. In a mutual fund, the fund manager is supposed to stay knowledgeable and invest the funds assets in various things. This is because I don't have time to figure out how the rumored proposed trade tariffs will affect my funds and what I should do!
When you are younger, you are supposed to take more risks, as you have more time to recover. (invest mostly in stocks, not bonds.) But it is not easy to take risk and not interfere with your own plan. For example, losing 10% of $1000 might be okay, but how will you feel about losing 10% of $10,000? It's the same loss, but more money!
One thing I will say is this: if you have an employer who offers a 401 match, if you contribute x% of your income, take full advantage of it!
Anyway, here is the link. Good luck!
https://www.icmarc.org/rec.html#topic-dropdown:path=.InvestWhatISave|paging:number=12
Kim
Carter’s Answer
This is a great question! I'm a recent college graduate who majored in accounting and finance but when I first started, I was just as eager like you to learn as much as I can about finance/investing. A major reputable platform that can give you access to most financial securities with zero trading fees is called "Fidelity". Before you decide to invest any of your hard earned money though, I would recommend that you learn as much as you can in your coursework regarding finance/investing. You never just want to blindly invest money into companies. On top of all your school education, some books that I would highly recommend to you that would certainly further your knowledge on finance/investing concepts include:
- The Intelligent Investor by Benjamin Graham
- One Up On Wall Street by Peter Lynch
- Stocks for the Long Run by Jeremy Siegel
- Unshakeable by Tony Robbins
I hope you can find this information to be helpful! Good luck with school and your future career in finance my friend!
Brad’s Answer
You can open an online brokerage account at Schwab. It costs $4.95 to purchase or sell a stock. There are also mutual funds available that don't have any fee, but you have to hold them for something like 60 days before you can sell without a penalty.
A few things to remember:
1) never invest what you cannot afford to loose
2) paying off debt can be a guaranteed "return on investment" if you have debt. This is because you save interest you would have paid... and that savings is like a tax free investment. Paying off a 7% interest loan, can be the same as a 10% return on investment, because you have to pay taxes on your investment returns.
3) research - invest in what you understand. If you don't understand an investment, research it until you do.
4) come up with a long term plan, and stick to it to avoid being influenced by fluctuations in the market. But, balance that with having an open mind and being willing to change your long term plan if there's a good reason.
Its fun to see your investments grow. Everyone makes mistakes with investments, learn from them and go on. I've learned a few lessons from not doing enough research in some investments. But its rewarding to see your investment grow when you make good choices.