One of the best viable ways to grow your money is to start investing in the stock market though it has it up and down you can build wealth with it if you can endure for long years.
Why Invest in the Stock Market
The benefits of stock haven’t changed and you can consider it as one of the viable investment options for this reason.
You Can Start Cheap
Stocks don’t ask of you plenty of cash to start, you can start low and scare up gradually.
Online brokers have has made it possible to purchase stocks for low fees.
You are in the best position to determine how much you want to invest and the broker you want to work with.
Allows You to Diversify Your Portfolio
The best way to safeguard your investment is to diversify your investment. Some of the places you can spread your money to within the stock market are mutual, funds, bonds, ETFs and stocks.
Try to combine some of these for income securities and to protect your investment from the inherent volatility of the stock market.
It Is A Fast Way To Increase Wealth
Nobody can tell how your stock investments will perform, if done properly and it favours you, you can build wealth or increase your wealth.
Most successful investors use the power of compound interest to gather wealth over time, compounding is then a process in which an asset’s profits, compound interest allows your money to grow exponentially rather than in a linear manner.
You Can Get Help Anytime
Stock can be done by anyone, even when you don’t have to know the stock market, you can make money from it.
The financial institution or fund manager can help you invest your money on your behalf and also work to give you returns.
Note they will charge you a fixed rate for their services with the commission on profits made for you.
You can entrust your money to them as they will take care of it for you.
Many may be looking for the age bracket to start investing in the stock market if you are 18 and you are ready to build wealth.
Note that you need not look for quick money with stock and you should also know that stocks are highly volatile and they may lose value. Know the risk; Investing in the stock market is a long term game.
How To Start
Some of the benefits of why a stock market is a good place to invest has been talked about, i know you want to start investing but before you do you need to put some aspects in place and here are the things to do.
Find Out How Much You Can Invest
This is very important; you must know how much you can afford to invest; the reason is that you may lose part if not all, it is advisable to only invest the amount you know you can afford to lose and the best way to find out is to know your net worth, through your total assets and liabilities.
Calculate your net worth by subtracting total assets from your total liabilities. It gives you a good indication of how much money you have at your disposal for investments.
Know How Much You Should Invest
After you must have known what the money you have at your disposal for investments, the next thing is to check your situation and how it can affect your investments.
A few things to consider are
- What is your money need for the next 3 to 6 months is going to look like?
- Are you with a stable job?
- The money you have in your savings account is it going to be enough for your need and family?
- Do you have high-interest consumer debt?
If you have any pending high-interest debt, get rid of it before you invest any money into stocks; don’t invest money you cannot afford to lose or money you’ve saved for other purposes aside from investment goal.
Create an Investment Goal & the Approach to follow
Your investment goal will determine if you are going to be a short term trader or long term investor, there are a few questions you need to ask like what are you planning to achieve, What is the purpose of your investment, if you can answer these questions correctly you will be able to decide how to go about your investments and help you know what your ultimate goals are.
The investment approach to choose will help you decide if you want to be an investor that prefers to trade the stock market by yourself or prefer to have someone else managing the investments for you.
Open an Investing Account
Now that you have decided on your investment goals and approach, the next thing is to open an investing account. You have some options here.
Hire a Broker
Brokers are agents who trade securities on behalf of their clients. They get a commission from the trade done for people and that stand as their earnings.
You can source for brokerage firms locally, make sure are to work with a licensed and registered broker who has experience handling different portfolios.
Hire a Financial Advisor
Majorly the job of a financial advisor is to assess the financial needs of their clients and help them decide on their investments. Financial advisors don’t trade on behalf of clients. They are meant to only provide advice, tips, and suggestions but the client has to make the final decision.
If you don’t understand the finances or your specific financial goals, it will be a good idea to work with a financial advisor.
Since they provide advice on your overall financial plan, your investments can be streamlined by them for you, and also provide advice on where and how to invest your money.
There are some Robo advisor platforms you can use to your advantages site like Betterment will help remove the need for human intervention. The platform can automatically perform a variety of tasks including allocating, managing, rebalancing and optimizing clients’ assets, many of them are out there but choose from the safe and reliable one.
Do It Yourself
You may trust your knowledge, if you do then consider doing it on your own, using online brokers, allow you to invest in stocks and ETFs without the need to pay for an unlike the brokers and the Robo advisor that will charge you for their services.
Ally Invest, Webull and Robinhood offer commission-free trading and likewise, they offer great research and trading tools, as well as a large selection of securities and funds. They are a good place to start if you are considering doing it in your way.
In the stock market industry, there are five major investment options traditional investors can have access to and there are Individual Stocks, ETFs, Mutual Funds, Index Funds, and Bonds. You can go for anyone you fit comfortable with but as a beginner, it is advisable to stick with ETFs and Mutual funds.