How to Invest in the Stock Market?
By Miguel Dos Anjos
I am writing this blogpost July 10, 2020. As we know we are going throw some complicated times with this new virus, which have created lots of volatility in the market and opportunity. Some places are getting new surges but it does seem we might have a bigger than expected herd immunity.
So here I want to provide some guide and thoughts on how to start investing and for the second part of this post I will cover how to choose the right companies.
Disclaimer: I’m sharing with you what I did and what I do.
Consult with your financial adviser and take in consideration your specific situation.
When investing one can lose money.
Because so many companies are now on sale 50% off or even
75% off. While we want to invest to get profit even when investing in a company
that is hurting at the moment we need to know that that company will pick up
and keep walking and not just die off and bankrupt.
How to Invest in the Stock Market
There are different ways. Do you want to be more passive or active? How much time do you have? or how much time are you willing to allocate to this?
A- Pay a person or service to do your investing for you. That
will usually come with a cost. And that cost could eat lots of the profit.
Robo-adviser: a robo-adviser will usually charge a small fee, a fraction of what a human investor
would charge.
B- Another way would be doing it yourself
a- Day traders; buy and sale on same day. Might hold a stock for few hours or minutes.
b- Swing traders; hold for a few days or week.
c- Most people are long term holders. Easier to pull it off.
It is the strategy of most millionaires and billionaires.
Open an Investing Account
I started trading with a bigger platform, but they use to only
qualify free trades after a certain amount of business that a person did with
them. This has changed after Robinhood came up with free trades.
I suggest choosing a platform that charges no brokers
trading fees like Robinhood, Webull or M1 Finance. I keep reading great reviews
on them.
They are not paying me to say any of this and I don’t work
for them.
I have recently opened a Webull account. It took 10 minutes
applying. I got 2 free stocks. They are generous with the stocks. You can get a stock up to $1400.
Mutual Funds
Another way to invest in the stock market is doing it yourself.
Mutual funds are small pieces of many different stocks.
Index fund for example the S&P500 which is 500 large US
companies.
Every year as a company gets smaller it gets kicked out, and
as a company gets bigger it joins the S&P500. This way you get instant
diversification. You would be basically riding the market.
For many people this is the best rout. This strategy beats
most paid brokers.
What is the point to pay somebody to invest for you if they
can not even beat the average market growth.
Inflation
The market grows 11% in a 30 years average. We have average
2% to 3% inflation average year.
After Adjusted to inflation the market grows 9% yearly.
Inflation is when your money loses its value. For example if
we save money in the bank savings account growing at an interest of 0.001% we
get a penny for $1k a year.
But every year everything goes up in value 2% to 3%. We fight to
save the money & inflation diminishes what we can do with the money.
Individual Stocks
To invest in individual stocks it requires knowing the company.
People sometimes tell me: "you’re gambling your money". But no,
there is no gambling. It’s more like an educated investing decision.
Uncle Tom
If your uncle Tom that you know burns money like crazy tell
you “hey let me get a couple of thousands and I will invest it for us". You
already know the guy. So you don’t give it and if you did it would be more like
a donation.
But if uncle Tom is responsible, smart, you know his idea,
and you believe in him you give him the money no doubt! You are proud of him,
proud of his idea, you understand it, you support it, you see the clear potential, and/or know his good achievement record.
Same thing you do for the companies you choose.
Set a Budget for Your Stock Investment
Invest smaller portions. 100 or 500 see how you behave.
Because the market can be brutal with volatility (ups and downs). If you see
your account red today. What will you do? Start sweating and sell all you have
in a loss? Or do you see an opportunity to buy more at an affordable price?
If you picked companies that you know, and understand. You feel good and comfortable realizing it will come back up. Specially if it is in a sector like utilities, hospitals, or any service people cannot live without.
We want the most profit and least risk.
The more time you have before you need the money or before
you retire more aggressive you can be.
Not aggressive in terms of risking investing in companies
that can bankrupt but you don’t want to need to pull out money in an economy
downturn.
Don’t invest money you need next month or even maybe 1 year
or 5 years from now. Be prepared to be able to ride it the long run.
When Should Start Investing?
I say it is hard or impossible to time the market. So it is
best to have time in the market.
Everyone makes mistakes.
The biggest investors still stick to the basics.
Conclusion
📈 Open an account using my link and fund it with $100 and get 2 free stocks: Webull
🌐 Check my YouTube channel with more videos on this topic here: Make/Save/Invest
📚 Get my new book “Becoming FinanciallyFree”
📚 Book: “Making Money While Sleeping”
📑 Leave your comments and ideas down below!!
💖 Thanks for being here!!
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