Getting Started in Investing

Getting Started with Investing

Enamored with the idea of turning a dollar into two? How about committing capital today and expecting to obtain a profit for tomorrow? Investing is the way to secure one income stream for yourself.

There are many different possible investment vehicles, each with their own risk profile and potential returns. Some people are hesitant to deal with their own finances and prefer to work with a financial planner or investment advisor, which is fine for many. This guide is for the people who like to do their investing DIY style.

Initial Budget

The fist step is to determine how much money you can afford to invest each month. This may seem like a difficult question, but it’s actually quite simple. Take your net income and subtract all of your monthly expenses. The number you are left with is the amount you have available to invest.

If you don’t have any investing experience, it might be helpful to read about some different types of investments before deciding what to do with your hard-earned cash. You could start by looking into stocks, bonds, real estate or mutual funds. It’s important that you find an investment that aligns with your risk tolerance and time horizon.

Once you have determined the amount you want to invest each month, it’s time to start saving. Try to break your investing goal into smaller milestones so that you can remain motivated and see progress along the way. For example, if you would like to save $50,000 for a down payment on a home in five years, divide that number by 60 (months) and set aside $833 per month.

If you are able to save more than your investing goal each month, great! You can always reinvest those funds into additional investments or use them as a cushion in case of market volatility. But don’t forget: It’s important not to put all of your eggs in one basket. Diversifying your portfolio is key to minimizing risk.

Investment Vehicles

Once you have saved up some money, it’s time to invest! But how?

There are a few different ways you can go about investing your money. You can purchase stocks, bonds, mutual funds or exchange traded funds (ETFs) through a brokerage account. You can gain exposure to metals through stock or ETF ownership. Let’s also not forget about cryptocurrency.

Alternatively, you could invest in real estate by becoming a landlord or investing in a real estate investment trust (REIT). Or maybe you’re feeling particularly daring and want to try day trading? There are many options out there and the best way to find what’s right for you is to do some research.

No matter which investment vehicle(s) you decide on, it’s important that you understand the risks involved as well as the potential rewards. It’s also crucial to have a investing plan and stick to it. Diversify your portfolio, stay disciplined with your investing and be patient- the payoff could be huge!

Opening an Account

Once you’ve decided on an investment vehicle, the next step is opening up an account. This can be done through an online broker or a mutual fund company. Most of these institutions have a variety of investing options, so it’s important to do your research before settling on one.

I have accounts with a bunch of different brokerages, but I tend to do most of my trades with TD Ameritrade. They don’t charge for most trades and their platform is user-friendly.

The research tools could be better, though, and you can’t buy fractional shares (other than through ETFs). Then again, there’s always Yahoo! Finance, TipRanks, and TradingView for research and charting.


The next step is actually putting your money into the account. Many people like to set up recurring monthly transfers from their bank account into their investment account. This ensures that you’re not tempted to spend the money on other things and that you’re investing regularly.

You could also invest a lump sum amount all at once, but this can be more risky. If the market takes a turn for the worse right after you invest, you could lose money.

That’s why I recommend investing smaller amounts on a regular basis- it reduces your overall risk and allows you to dollar-cost average (DCA). DCA is investing a fixed sum of cash into a security or securities at fixed intervals.

By buying these securities over time, the buyer reduces the effects that sporadic changes, unrelated to the underlying asset, might have on price. In other words, it smooths out the peaks and valleys of investing.

Researching Your First Trade

Now it’s time to figure out the best place to put your money for now. The only way to do this, if you’re handling your own investing, is to dig deep into some research. It can take a lot of time out of your day, but it pays dividends (literally) and it becomes what I’d consider fun.

Read websites like Yahoo! Finance, Zacks, Motley Fool, TipRanks, Seeking Alpha, MarketWatch, Barchart, etc. These websites provide you with technical and fundamental information about publicly traded companies – things like share price, P/E ratio, beta, debt to equity ratio, things like that.

You should also be following investing news and reading articles from the people you trust. I like to read articles from Warren Buffet, Ben Graham, Joel Greenblatt, and Peter Lynch.

Once you’ve found a company that looks interesting, it’s time to dig even deeper. Read the company’s annual report (Form 20-F) and quarterly reports (Form Q). These documents will give you in-depth information about the company’s financials, operations, management, and more.

Then it’s time to figure out what you think about the company. Is its share price undervalued? Overvalued? What is the P/E ratio compared to other companies in its industry? How does its debt to equity ratio look?

All of these are important things to consider before investing.

Making the Trade

Now that you’ve done all your research, it’s time to put your money to work! You can either buy shares of the company you’ve researched or you could buy a mutual fund or ETF that invests in that company.

If you’re buying individual stocks, be sure to place a stop-loss order so you don’t lose too much money if the stock takes a turn for the worse.

A stop-loss order is an order placed with a broker to sell a security when it reaches a certain price. This helps protect investors from losing too much money if the stock declines in value.

For example, if I bought a share at $100 and set a stop-loss sell order of $95, the maximum I can lose on the share is 5% before the sell order triggers in the computer. I had a stop-loss in that protected me from the huge drop ATVI stock suffered upon its workplace culture revelations.

Knowing When to Sell or Hold

One mistake many new investors make is selling too quickly. You need to know that there will be some losses, but only with patience can those losses be recovered. You can sell a stock at a loss, but keep your money in the market somewhere so you’re ready for those up-days.

Selling strategies depend on your investment timeline. Day traders buy stocks with the intention of closing their position at some point during that same trading day.

Conversely, long-term investors prefer to hold onto shares for several years before even considering selling. Your buying and selling strategies are a reflection of the type of risk you are prone to taking.

Reinvesting Your Profits

One of the best things about investing is that your profits can compound over time. When you make money on an investment, reinvest that money back into more investments. This will help your money grow even faster!

Final Thoughts

Congratulations! You’ve taken the first steps in becoming a successful investor. Now it’s time to start reaping the benefits! Remember, investing should be treated as a long-term game.

Don’t get discouraged if you don’t see immediate returns – stay focused and keep reinvesting. Also, don’t get distracted by too much information – learn to pick a couple of trustworthy sources and stick to them. With well-researched and timed investing, you should be able to grow your portfolio at or better than the market return rate.



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