What Are Your Goals?
One of the first things you need to know as you get started investing in the stock market is what are you investing for? Are you investing for your future retirement, or are you investing to pay for your children’s future college education? Maybe you are considering investing for a different reason altogether. The point is that the reason you are investing could influence the way you choose to invest.
How Old Are You?
If you are a young investor you are very likely to invest differently than if you are closer to retirement age. For example, young investors who have the advantage of time might make investments that are a bit riskier than those who are middle aged or closer to retirement. Riskier investments traditionally make greater returns and losses that occur can be made up more easily if you are young. However, as you age, you have fewer years ahead of you to make up for losses, so shifting your investment strategy is a good idea. You might choose to increase your contributions to your investments in order to maximize growth in the few years you have left until retirement. Also, putting more of your money into less volatile investments might be a good idea.
If you want more control over how you are investing, take a look at Motif Investing. They offer theme-based investing which allows you to choose your own funds for a flat fee. They do have pre-made funds as well, and they offer low minimum account balance requirements to help you with your investing needs.
How Much Time Do You Have?
Choosing stocks yourself might seem fun, or it could seem scary to you if you feel like you aren’t sure about what you are doing. But no matter which scenario fits you, picking stocks for yourself takes time. In order to be successful, you have to choose the right stocks that are going to make gains rather than losses. How do you know which ones to pick? This is where exchange traded funds, or ETF’s, can help. ETF’s are usually made up of a group of funds but trade as though it were a single stock. This can be a great help to a beginning investor with little time to education themselves on the stock market.
Watch Out for Fees
Another disadvantage of choosing your own individual stocks to trade is the trading fees. They can vary and quickly eat up your returns, which is another reason ETF’s are a good idea. Make sure you find out what the fees are before making a choice of where to invest your money.
If you have considered investing, it is possible to make investing in the stock market simple so you feel more comfortable doing so without the fear of losing everything you have. It doesn’t have to be complicated.
Do you know of other ways to make investing in the stock market simple?
Kayla is a personal finance blogger in her mid-20s who loves to write about money topics of all kinds.
James Hendrickson is an internet entrepreneur, blogging junky, hunter and personal finance geek. When he’s not lurking in coffee shops in Portland, Oregon, you’ll find him in the Pacific Northwest’s great outdoors. James has a masters degree in Sociology from the University of Maryland at College Park and a Bachelors degree on Sociology from Earlham College. He loves individual stocks, bonds and precious metals.