If you read ‘How To Invest In The Stock Market (Step By Step)‘ you knew I was going to publish this post and are most likely already investing in stocks. I want to provide my readers with more value. If you’re brand new to the stock market then this article was tailored just for you. Here are the best tips and advice for beginners investing in stocks.
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Please note that we are in no way encouraging people to invest in the stock market. These are only tips and advice for those who have just started investing in the market. Investing in the stock market is only one of many ways to build long-term wealth so we will be focusing on this particular subject. It is our pleasure to present some of the best tips and advice for beginners investing in stocks.
FrankNez invests for the first time
I’ve been investing in the stock market since August of 2019. When I learned what a brokerage account was and how to open one, I dove right in. I was hooked on the idea of multiplying my hard earned money and felt like I had discovered a secret.
When I realized how difficult it was to find anything on Google regarding investing for beginners, I decided to take Franknez.com live in efforts to make investing in stocks less intimidating for the curious individual.
I’ve learned a lot investing in stocks and I’m glad I was able to go through trial and error so you won’t have to. Here are my 10 investing tips for beginners investing in stocks.
#1. Get Familiar With Stock Details
It’s important that you begin to familiarize yourself with the contents within your platform or brokerage account of choice. Learn to navigate this new platform and get familiar with your stocks details.
In this example from Vanguard, you’ll be able to see a complete overview of the stock itself. It will provide you with a detailed quote overview, company information, performance, and so much more.
As a new investor in the stock market, it would be beneficial to you to familiarize yourself with the details you encounter on your platform so that it becomes easier to navigate. This will help you understand the statistics of the stocks you’re purchasing.
You might already know which companies you’d like to invest in but going over the company overview and history should provide you with more confidence when making a trustworthy investment.
To find a companies ticker symbol, you can Google the companies name and add ‘stock’ at the end. Google should show you the ticker symbol so you can look it up on your brokerage account.
#2. Always buy the lows
It is only natural for beginner investors to buy when the stock market is green. When beginner investors see gains in the stock market they tend to get excited and jump in. The matter of the fact is that this is a sure way to lose more money than to actually make it.
Huh? What do you mean? Isn’t a green market good?
A green market is a sign the economy is doing well and companies in general are performing phenomenally. However, you’re going to want to purchase a stock on discount. Here’s what I mean.
The strategy is to purchase stocks when they are low, in red. When you purchase a stock during lows you’re essentially purchasing the stock at a discounted price.
The number one goal for companies is to always be profitable and to see large gains throughout a given period of time. Buying the lows has a better probability of you seeing more gains than if you bought green and the market drops months or years later.
See the thing is that companies must take care of their shareholders. If a companies shareholders aren’t happy then they won’t invest in said company. In other words, a company is always striving to stay green so if it slips and you really believe in the company, buy the stock on discount.
#3. Check your gains/losses regularly
For beginners investing in stocks I strongly suggest checking your gains and losses regularly. Again, it is very important to familiarize yourself with the game and with how the stock market changes based on decisions made around the world and business. Be aware of how your investments are performing!
Checking the performance of your stocks allows you to see the short-term progress of a company.
The way I make my investments is if a company is performing well short-term then they will more than likely be a great fit long-term. This strategy has actually proved to be very successful for me personally.
The benefits of checking your gains and losses frequently are:
- You learn to identify how well a stock is performing
- And you increase your awareness of how your money is working for you
Most brokerage accounts have a mobile app to help you see your short-term unrealized gains and losses.
#4. Know when to stop investing
The last thing you want to do as a beginner investor is to put all your money in the stock market. You might be seeing gains so it’s easy to get excited when you see the value of your investments increase; however, it is wise to let things play out in the beginning. You’re going to learn that stocks can tumble just as fast if not faster than it took to see gains.
When you’re beginning to invest in the stock market you’re going to want to learn how to float before you can begin to swim. Knowing when to stop investing is a skill you’ll eventually come to understand and learn one way or another. Wait for the perfect opportunity to continue investing.
Save to invest, but build your emergency fund too
I recommend saving for a rainy day first before you commit to purchasing assets. Build your emergency fund and then keep building. This way, when an opportunity occurs (such as GameStop or AMC) you’ll be ready.
There will come times when opportunities present themselves to you in the stock market.
Don’t put all your money in stocks that are doing amazing one week because something can happen internally within the company causing it to drop below what you purchased it for.
Investing in stocks shouldn’t be a gamble, it should be a strategic way to build wealth long-term.
#5. Purchase stocks with low commission fees
A low commission fee is anything under 1%. Stocks with 0.40%, 0.04%, 0.01% are amazing because you won’t even feel the fee. When you buy stocks with commission fees over 1% you will certainly see the deduction. Always keep this in mind when shopping around for a new stock to purchase.
Vanguard has some of the lowest fees which is why it’s a very popular and trusted brokerage for retail investors.
Purchasing stocks with low commission fees is simply going to help you maximize your returns.
#6. Think long term investing
One of the best tips and advice for beginners investing in the stock market is to think long-term when it comes to your success in the market.
A long-term strategy will have a higher reward than those looking for instant gratification. By delaying gratification you will bear the tastiest fruit. Don’t pick fruit that isn’t ripe. Investing in the stock market is a long-term game for the most part.
You might have been drawn to swing traders or day traders but the fact is that those investors are stock analysts and have a huge advantage over the average retail investor.
The snowball effect
When you figure out which stocks are you best performing stocks after your first year of investing, you’re going to see your account begin to snowball. With time, these investments are going to multiply.
#7. Reinvest your dividends
This is probably one of the most important tips and advice for beginners investing in the stock market. When you’ve purchased a stock, bond, REIT, or index fund, you will have the option to either cash out your dividends or reinvest them.
- If you choose the option to cash out your dividends you will receive them into your account balance as cash.
- If you choose to reinvest your dividends they will automatically be applied to that same stock which will eventually purchase another share with time.
By reinvesting your dividends, you are essentially setting yourself up to make a lot more money on the long run. My recommendation is to reinvest your dividends for the highest return possible.
This strategy is going to maximize your returns and allow that snowball effect to really grow massively with time.
#8. Don’t panic when your investments aren’t winning
The stock market is volatile. It goes up and it goes down.
It might stay down for a few days before it goes up and vice-versa. My advice to you is to not panic sell if your stocks are not performing the way you anticipated them to. Instead, give them time.
Only sell when you come to an educated and reasonable conclusion as to why the company is no longer worth you investing in.
You will find out that some of the most difficult decisions as a new investor will be when you are confronted with the choice to sell your shares or continue holding out. Experience will ultimately be gained when faced with such decisions.
Trending: Is It Too Late To Get In On AMC Stock?
#9. Follow business news and updates
I recommend beginners investing in stocks to follow the stock market and business news for stocks you’re investing in.
By watching closely at what is influencing the stock market, you will gain an insight that will help you monitor your own investments and predict the best decisions regarding your buying or selling experience.
You might naturally gravitate towards these sources the more you familiarize yourself with the investing world.
Note: Build an awareness to see how events, deals, and companies influence the volatility of the stock market.
News to stay away from
I personally stay away from platforms such as The Fool, MarketWatch, InvestorPlace, and Yahoo Finance as much as I can.
These platforms are paid platforms that write about stocks in order to influence the flow of retail trade going in or out of a particular stock.
It’s unethical and I won’t recommend you use those platforms. Instead, follow the companies you’re investing in on social media.
#10. Never stop learning
When I published my article on how to invest in the stock market I thought I knew a lot about how the market works.
It wasn’t until the Reddit movement that made realize just how much more there is to learn!
I’m grateful for the community because it forced me to step outside of my comfort zone to educate others in the community who otherwise didn’t understand a lot of the mumbo jumbo and investing world lingo. So, I’ve made a lot of the DD easy to learn.
My advice to new retail investors investing in stocks is to never stop learning.