HOW TO START INVESTING IN THE STOCK MARKET: A BEGINNER'S GUIDE

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If you’ve ever thought about investing in the stock market but felt it was too complicated or scary, this guide is for you. Today, we’re breaking down the basics of investing so you can start growing your money with confidence. Whether you’re in the military or just looking to learn, this article will give you the tools to get started. Let’s dive in!

WHY INVEST?

Who doesn’t want to make more money without having to think about it? Investing in the stock market is one of the best ways to grow your wealth over time. The key is to start early and let your money work for you. In this guide, you’ll learn:

  • What stocks are and how they work.

  • The power of compound interest.

  • How to start investing today.

WHAT IS COMPOUND INTEREST?

Compound interest is like a snowball effect for your money. It’s when you earn interest not just on your initial investment but also on the interest you’ve already earned. Over time, this can lead to huge growth.

Here’s an example: If you invest 6,000 every year starting at age 20 and earn an average of 102.7 million by age 60. That’s the magic of compound interest! The earlier you start, the more time your money has to grow.

WHAT ARE STOCKS?

A stock is like owning a small piece of a company. When you buy a stock, you’re buying a share of that company’s success. Companies sell stocks to raise money for growth, and investors like you can buy them to potentially earn profits.

There are two main types of stocks to know about:

  1. Common Stock: This is a share in one specific company.

  2. ETFs and Mutual Funds: These are like baskets of stocks. Instead of buying one company’s stock, you’re investing in many companies at once.

BEST BEGINNER STOCKS

If you’re just starting out, here are some great options to consider:

  • VTI: Tracks the entire U.S. stock market.

  • VOO and SPY: These track the top 500 companies in the U.S. (also known as the S&P 500).

The S&P 500 has historically returned an average of 10% per year since the 1950s. That’s why it’s a safe and reliable choice for beginners.

INVESTING PLATFORMS YOU CAN USE

If you’re new to investing, choosing the right platform can make a big difference. Here are two beginner-friendly options I recommend:

  1. Robinhood:
    Robinhood is a great platform for beginners because it’s simple and easy to use. You can start investing with just a few dollars, and the app makes it easy to buy and sell stocks, ETFs, and more. Plus, there are no fees for most trades, which is perfect if you’re just starting out.

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          2. Acorns:
Acorns is another excellent option if you want to invest without thinking too much about it. The app automatically rounds up your everyday purchases and invests the spare change into a portfolio of ETFs. It’s a hands-off way to start investing, and you can set up recurring deposits to grow your money over time.

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HOW TO GET STARTED

Ready to start investing? Here’s what you need to do:

  1. Open an Account: Use beginner-friendly platforms like Robinhood or Acorns. These apps make it easy to start investing with just a few dollars.

  2. Deposit Money: Transfer money from your bank account to your investing account.

  3. Invest in the S&P 500: Start with a simple, low-risk option like VOO or SPY.

  4. Start Now: The sooner you begin, the more time your money has to grow. Even waiting one year can cost you thousands in the long run.

HOW MUCH SHOULD YOU INVEST?

The amount you invest depends on your financial situation and goals. Here are some tips:

  • Invest for the Long Term: Think about your future self. The earlier you start, the more you’ll thank yourself later.

  • Only Invest What You Can Afford to Lose: Never invest money you need for bills or emergencies. Investing is about growing your wealth, not gambling it away.

  • Start Small: You don’t need thousands of dollars to begin. Gradually increase your investments over time.

WHY START NOW?

Keeping your money in a savings account might feel safe, but most banks offer less than 1% interest. That means your money is actually losing value over time due to inflation. By investing in the stock market, you can earn an average of 10% per year and beat inflation.

FINAL THOUGHTS

Investing doesn’t have to be complicated or scary. By starting small, staying consistent, and focusing on the long term, you can build wealth and secure your financial future. Remember, time is your greatest ally when it comes to investing. The sooner you start, the better.

If you found this guide helpful, share it with friends or family who might benefit. And if you’re ready to take the first step, open an account today and start investing. Your future self will thank you!

Good luck on your investing journey, and remember: the best time to start is now. 

Disclaimer: I’m not a financial advisor. This article is for educational purposes only. Always do your own research before making any investment decisions.

© 2024 Joey Nguyen

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