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6-Step Guide to Investing in Stocks

by pps-DUEditor

Stock investments are an excellent way to improve your financial standing. Here’s a six-step guide to help you start investing:

Decide How You Want to Go About It

You can choose an investment approach depending on how involved you’d like to be in the process. If you’re a do-it-yourself type of investor, you can pick stock funds and stocks yourself. If you want help managing the work, use a robo-advisor (a low-cost service brokerage firms offer to look after investments). Once you finalize this, you can open an investing account.

Pick an Investing Account

Hands-on investors can open an online brokerage account themselves, which is the fastest and least expensive way to buy funds, stocks, and other types of investments.

If you want help, you can open an account through a robo-advisor. During the onboarding process, the company offering the service will ask what your investment goals are and build you a portfolio accordingly.

Understand the Difference Between Stock Mutual Funds and Stocks

Typically, you can pick either of these two investment types:

Individual Stocks: If you’re looking to invest in a specific company, purchasing a single share or a few shares is the way to go. Although it takes quite a bit of investment to build a diversified portfolio out of several individual stocks, it’s possible.

Stock mutual funds or exchange-traded funds (ETFs): Mutual funds let you purchase small portions of different stocks in one transaction. ETFs and index funds are a category of mutual funds that track an index.

Stock mutual funds are diversified and lower your risk of investment. However, they’re unlikely to grow as exponentially as some individual stocks.

Know Your Budget for Your Investment

The price of individual stocks varies by company. If you’re on a conservative budget and want to invest in mutual funds, ETFs are your best bet as they trade at a share price (sometimes even less than $100).

Think Long-Term

When you invest, purchase only those individual stocks that you believe have the potential to grow in the future. The best thing after investing in stock funds or stocks is to avoid checking their performance multiple times every day.

Manage Your Portfolio

Don’t check your portfolio too frequently, but revisit it a few times a year to make sure the stocks or stock funds you own remain aligned with your investment goals.

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