The actual nuts and bolts of how to invest in the stock market are pretty easy. You open a brokerage account and place an order with your broker to buy or sell some stocks. A good firm to open an account with is Charles Schwab by visiting https://www.schwab.com.
The hard part is learning what stocks to buy and sell and when you should buy and sell. This part is considerably more difficult, and if you want to do it right, you must be willing to invest more than money… you need to invest time.
Time to educate yourself and find a partner with who you can work. This is where so many people mess up. They think they can hire a broker and jump right in.
Most people treat their investing more like gambling. The truly successful investors believe that gambling is what you do when on vacation, not how you treat your hard-earned money. It is generally acceptable to allocate 5-10% of your money to risky investments or speculative assets. But as a rule, I do not recommend going over 5% of your assets or portfolio in speculative investments.
So, the first step you should take if you want to learn how to invest in the stock market is to find a place to get educated on investing. There are many sites where you can get an insight into stocks. One good free source is https://finance.yahoo.com/. Suppose you would like to have a premium service I use and can recommend Morningstar. The basic investor package is $199 and can be joined at https://www.morningstar.com/.
You can read books, take-home study courses, and even take courses at your local college (in many cases). For some of the books I have written on investing and other finance topics, visit https://www.personalfinancemadesimple.com.
The point is that information on investing is not hard to find. What might be a little harder to find is good information.
Some of the most successful and wealthy investors have ever done things their way. Most of what they do will be different from what many advisers around today will tell you to do.
That is because many advisers have their interests at heart. Many of the so-called financial experts that people turn to to help them invest are only commissioned salespeople.
While there is nothing wrong with being a commissioned salesperson, you must understand that going in.
If your adviser only makes money when they buy or sell stocks for you and their other clients, how can you be sure that their advice to buy or sell a certain stock is in your best interest or if it’s just a way for them to make more money? Look for a Registered Financial Consultant that is also a fiduciary and fee-only planner. They, by law, have to act in your best interest.
Or, think of it like this; who would you rather take advice on investing from someone who doesn’t make enough money on their investments to live on so they have to work for someone else and make commissions, or someone who lives on the money they make by investing their own money?
It kind of sounds like a no-brainer to me, so be very careful who you decide to work with when it comes time to make your investments. Not all advisers are created equal.
This is the biggest reason I can think of to take some time to educate yourself on at least some basics of investing first. If you know nothing about investing, you are basically at the mercy of whoever you hire to help you.
Your success, or lack thereof, will be tied to the knowledge and honesty of the person you hire to work with. If you don’t know anything about the process, you can’t assess how good your information is.
Good luck with your investing, but remember, a successful investor knows that it has nothing to do with luck and everything to do with knowledge of how to invest in the stock market.
For assistance, or if you have any questions, feel free to reach out to me directly. If you do not live in the Nashville, Tennessee, area or would prefer someone local, seek out another qualified Registered Financial Counselor who is also a fiduciary fee-only planner.
