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Want to start investing in stocks? Good on ya!
Stock investing is a great way to build wealth. It’s also a great way to lose a ton ‘o money in the blink of an eye if you don’t know what you’re doing.
Learning how to start investing in stocks can be overwhelming and intimidating cuz there are so many options…
… from what companies to pick to where to open a trading account to what investing strategy to use to what kind of brokerage account to open and on and on.
Having lots of options can be good. It can also make newbies even less sure about the right way to get started.
So, below, we give you a drop dead simple step by step guide on how to get started investing in stocks.
It’s not the only way. It may not even be the best way (if there even is such a thing). But it’s sound advice and super easy to follow so here goes…
How To Start Investing in Stocks
Step 1: Save some money you can afford to lose
This is super important. Don’t trade money you can’t afford to lose! Lots of folks online and in the media make it sound like the stock market is so simple and it’s all rainbows and unicorns.
It ain’t.
Assume you’re going to lose (some, not all) of the money you invest when you’re first starting out. Be happily surprised if you don’t.
But, either way, don’t trade money you’d need to rely on to put food on the table. And never EVER borrow money to invest in the stock market.
Step 2: Open a trading account
In order to buy a stock, you’ll need to have money in an account with an online broker.
Robinhood is a popular choice these days, but has its drawbacks.
I’d recommend sticking with one of these brokerage sites you can use to trade stocks for free.
Step 3: Fund your investment account
Kind of obvious, but you’ll actually need money in your investing account before you can buy a stock!
Usually this is done with a bank transfer to your investing account. The brokerage company you use can help. Just take in mind it’ll usually take a few days for the money to be transferred.
Step 4: Brainstorm some companies to invest in
This is the exciting part! Time to pick a company you want to invest in.
Here’s what I’d recommend for your first stock…
… Pick a company you know and believe in. One that, based on your experience/opinion, you believe is gonna be around for a long time.
That’s it.
If you use and love Apple products, buy Apple (AAPL).
Think Tesla is freaking amazing (I do too!), put some money in Tesla (TSLA).
Spend a lot of time at Tractor Supply Company, you can buy TSCO.
There’s no shortage of great companies you can choose that you’re a customer of / think they’re a great business – Disney (DIS), Google (GOOG), Ford (F), Microsoft (MSFT), GoPro (GPRO), Amazon (AMZN), Uber (UBER), Netflix (NFLX), are just a few examples of companies you can invest in.
You get the idea.
One other thing here is that I’d recommend sticking with large, well established companies. Stay away from smaller public companies that you may be familiar with due to your job and/or where you live.
Smaller companies pose some unique challenges for investors so when you’re first getting started, better to steer clear.
Step 5: Narrow your list down to 1 company
Do a little bit of research of the companies on your list. Not much though.
But at least go to Yahoo Finance or a site like it and look up the companies there.
Just see what kind of info you can get on the company. Don’t worry about what all the numbers mean right now.
Make sure the company you want to invest in is actually a public company you can buy stock in (For example, SpaceX s a private company so you can’t buy stock in it).
Also, look up their ticker symbol (those are the 1 – 4 letter symbols after each of the companies listed in the previous step). You’ll need that when you actually go to buy the stock.
Lastly, you’ll want to know what the current stock price is. Stocks like TSLA are (at the time I’m writing this anyway) over $1000 per share of stock. That means if you only plan to invest $100, you can’t buy a full share.
(Some stock trading companies like Robinhood allow you to buy fractions of a share of stock so don’t feel you have to miss out on a stock because it’s share price is higher than what you plan to invest.)
After doing some quick and dirty research for a few companies on your list, narrow it down to just one that you want to invest in (at least to start!).
Step 6: Buy a share/some shares of your stock
Now that you know what company you want to invest in, go to your stock trading account.
There will be an option for “Trade” or “Buy/Sell” a stock.
Go there.
How this all works can vary a bit depending on the stock trading site you’re using, but here’s the general way you’ll buy a stock…
1. Enter the Ticker Symbol of the stock you want to buy.
2. Enter how many shares you want to buy. (As an example, if you want to invest $1000 and the stock price is $100 a share, then you can buy up to 10 shares.)
3. Select that you want to buy shares (not sell or any other options they may have).
4. If you can specify an order type, select Market Order.
5. Click the “Place Order” (or equivalent) button.
Congratulations!!!
You just invested in your first stock.
What To Do Next After Investing in Your First Stock
The above should give you a good primer on how to start investing in stocks. Now that you’re in the investing game, follow the stock you just bought shares in. Watch the price as it goes up and down. Watch the volume to see how many shares of the stock trade each day. Pay attention to news items, earnings reports, etc. about the company and see how those things affect the price of the stock.
Also, take some time to learn more about investing in general. Read our articles here or on other credible investment sites (stay away from the hypey “get rich fast with stocks” type garbage – it ain’t your friend).
And as you get more comfortable and have more money to invest, start investing more in the stock you just bought and/or others that strike your fancy.
