Want To Start Investing? Start With This Investment Stack

Do you know that “how to invest in stocks step by step” is one of the biggest Google searches in regards to Money/Finances? But it also reminded me of one of the first events that I had as a Financial Educator. No worries, it’s a reason for me leading this post with this.

I got an invite some years ago from the Public Invest and General Assembly to be a part of a session that spoke about the Meme Mania that we were seeing from stocks like AMC and Gamestop. During that event, I got one question from the audience about why it was important to invest in the stock market. I led with the insight that people saw what happened during that time and felt that was what investing was all about. You can watch the event here!

Which - it wasn’t.

While that meme stock run was how a lot of people got into investing, it also gave some investors a bad taste in their mouths for the possibility of losing their hard-earned money. No one likes to lose money - falling out of their pockets or seeing the stock market rock their portfolio. And that time really wrecked how people saw investing along with continuing to invest in the stock market.

Another series of questions that I get along with that one from the audience is probably one that you have while reading this:

“What are different ways to invest?”

“How to invest in stocks?”

“How to invest with little money?”

No matter how you ask it, the fact that you’re looking for more information on how to invest in the stock market shows that it is a good time for you to actually start doing it. And to invest seriously not just because you see the hype around something on social media. No matter if you’re new or you’re true to investing, you are never behind in learning more. Learners are earners, and the fact you want to learn more about investing proves you’re right on schedule.

To start off, I wanted to give you some high-level of what investing in the stock market is. Investing is like trading of your money for a small piece of ownership in a company or a fund. Companies offer shares or parts of their company to investors like you and me to raise money to grow their company. You not only have a bit of ownership that could grow your wealth over time, but you also get a say (via voting) on key things that happen in that specific company. The more you invest, the potential of it grows over time. And you don’t have to lift a finger to do it! Yet, you have to learn about the company and investing in general to make the right decision on if you should buy and how much. I call this homework but you might hear the term “due diligence” mentioned.

Do you need to have a lot of money to invest? You sure heck don’t. Even on some some platforms, you can use as little as a dollar and build from there.

Here are the types of stock investments you can make:

Stocks (also known as individual stocks or retail stocks): Stocks or shares of stock are a part of the share of the company; when you buy the stock/share of stock, you are buying ownership into the company. You can buy a full share of the stock (what you see on the stock market) or you can buy a fractional share (or piece of said stock) on some investing platforms (brokerages).

Penny Stocks: When you see stock prices drop below $5 per share, they are considered Penny stock. They could go up in price, but there’s a reason why they are below that level - the performance of the company and the stock itself. They are very risky unless you know how to research stocks.

Mutual Funds: These are funds that you invest in that have a combination of stocks, bonds, and short-term debt. Each of these funds are managed by a fund manager. They give you diversification built in and have low costs and any gains you get are automatically reinvested. Depending on how much bonds/debt is in the mutual fund, it could pull your value down (you lose money). Also when stocks go up, bonds often go down and vice versa. I like mutual funds if I have been investing for a while and know that you’re going to hold them for a while. But for new investors, learn more and then invest in these later.

Index Funds: These types of funds are great if you want low-risk investing. Index Funds are like ETFs, but they track the indexes more so than the companies (there could be around a couple hundred or thousands of funds within an index fund). Indexes like S&P 500 or the Nasdaq 100 are watched by the fund managers of those index funds. They then look at the S&P 500 and what stocks/funds are in it and then develop those index funds. As the S&P 500 or Nasdaq does good, the index fund that you buy will also uptick or go up. You legit are buying that index focus for one price.

ETFs or Exchange-Traded Funds: They are like Index Funds, but focused on sectors or groups of stocks, bonds, cryptocurrency, currencies, futures, and commodities (a couple hundred or even thousands) into that one fund for one price. But you are buying pieces of the companies/funds pooled into one price. I spoke about ETFs and the different types of them here. Why do I love ETFs? I love them due to the fact that if Apple shares are down, but you have $QQQ, you will not see much impact on your overall portfolio value due to $QQQ has more in it than just Apple. I'm not suggesting that you buy $QQQ or Apple, but as an example for you to know how to invest in them.

Now that we have an understanding of what types of stock you could invest in or with, let’s get into some things to keep in mind: 

1. Know your goals:

Figure out what you want your money to do for you—whether it's buying a house, retiring comfortably, or something else.

2. Emergency Money First:

Before diving into investments, make sure you've got some money set aside for emergencies—enough to cover your living expenses for a few months. I talked about that here and in this video.

3. Learn the Basics:

Get the hang of how investing works. It's like learning the rules of a game before you start playing. That’s why I wanted to bring this post to you. When you learn the basics, you can build your portfolio - no matter what’s going on in your wallet or the economy.

4. How much risk can you take?

Understand how comfortable you are with the idea of your investments going up and down. This helps you choose the right investments. If you can’t take much risk, find funds that will match how much you can stomach. Only invest what you can stand to lose, period.

5. Spread your bets:

Stop putting your eggs in one basket applies here. Spread it out into different types of investments to lower the risk. Risk tolerance is simply how much of a dip would make you trip. If you freaked out in March 2020, you might need to shift your investing towards index funds and ETFs that have been around for over 5 years with a strong track record and low fees. 

6. Start with Retirement Savings:

If you can, begin by saving for retirement. There are special accounts that give you tax benefits for doing this. Individual Retirement Accounts or IRAs (Traditional or ROTH), and 401K are often ways for you to do so. You can open up retirement savings on your own, the match of your employer is good but not the only thing. Don’t just contribute, contribute - distribute by buying funds like ETFs and Index Funds. Roll over old 401Ks into a Roth IRA and build from there. 

7. Pick the right investing platform:

Decide where to put your money—not just any brokerage, but many fees they have and do they have a lot of stocks on the platform. I always recommend:

Charles Schwab: A comprehensive brokerage offering $0 commissions on online stock and ETF trades, extensive research tools, and strong customer service, catering to both beginners and advanced investors. They have fractional shares as well.

Fidelity: A well-rounded brokerage with $0 commissions on online stock, ETF, and options trades, robust research tools, and excellent customer service, suitable for all types of investors (yes, fractional shares).

Vanguard: Renowned for its low-cost index funds and ETFs, Vanguard focuses on long-term, buy-and-hold investing with $0 commissions on online stock and ETF trades.

Public Invest (you get a free slice of stock on me): A social investing platform with $0 commissions on stock and ETF trades, allowing users to follow and learn from other investors while offering fractional shares.

Ally Invest: Part of Ally Financial (love their HYSA), offering $0 commissions on online stock and ETF trades, comprehensive trading tools, and integration with Ally Bank accounts, ideal for both new and experienced investors.

Acorns: A micro-investing platform that rounds up everyday purchases to the nearest dollar and invests the spare change, ideal for beginners seeking automated, hands-off investing (also with fractional shares).

While there are many others, you can try out multiple ones to see what fits your investing style. I know that you might be looking to buy stock but be mindful of how the platform funnels to your goals. If you don’t like it, you can always transfer your portfolio to another brokerage ( be mindful of the fees that could come with doing this). Know if this is for an IRA or just a traditional brokerage (investing) account before swiping on a platform.

Also, look to see if they allow you to do fractional shares so you can build within your budget. 

8. Get to know Stocks:

If you're thinking about stocks, understand the basics. Which is what this blog post is about. It's like understanding a bit about a company before you buy a part of it. How does the company perform, how did they hold up during the pandemic. If you’re looking for companies to start with, look here. 

9. Starter Funds - ETFs and Index Funds:

If you’re new, I would highly consider you to look into index funds or ETFs. They're like investment bundles that are less risky for newbies. How perfect is that? 

10. Stay informed but don't overreact:

When the market is tripping and dipping, don’t tip out. Keep an eye on what's happening in the money world, but don't panic if things go up and down. Patience often pays off in the long run. Portfolio psychology is something that isn’t talked about much. 

11. Check your investments:

Look at how your investments are doing from time to time, I would at least say monthly. Another tip I give my clients is for you make a watch list via Google Finance of what’s in your portfolios (brokerage and retirement holdings).  Make changes if you need to do your portfolio match what you want to achieve.

12. Ask for help before you wreck yourself:

Get started but if you need more insight on how to build your investments, we can work together to build. I want you to get started first, which is why I wrote this for you!

Remember, there's no sure thing in investing, and it's okay to start small - the scale is at the start. The key is to have a plan, be patient, and make adjustments as needed.

So, how do you buy your first share of stock or just stock in general? I got you!

• Pick a stock broker/platform:

Sign up with a stock brokerage platform of your choice. I gave you some suggestions a bit further up in the post. Follow the platform's instructions to create an account.

• Deposit funds:

Link your bank account to your brokerage account. This allows you to transfer money from your bank to your brokerage account. Deposit an amount you're comfortable investing. I would also add that you to look at your budget to see how much you can consistently auto-save from your core banking into your brokerage account. So when you have enough to save in a specific stock or fund (full or fractional share), you would not have to find the money that’s already there. I suggest that if you were to start investing you look at your budget, and set an amount you can automate to invest enough paycheck or month - do it. It allows you to build your cash overtime to invest when you want to vs trying to tap Peter or Paul at the last minute.

• Research and select a Stock:

Use the tools provided by the brokerage platform to research stocks. Look for companies you're interested in or that align with your investment goals. Consider factors like the company's financial health, performance, and future prospects.

• Place an order:

Now you’ve looked at the stock you’re interested in buying and researched them thoroughly. Also look at your budget to see if you can swing the full share or fractional; go to the platform's trading section. There, you'll find an option to buy stocks. Follow these general steps (the exact steps may vary slightly between platforms):

• It’s GO time:

Select "Buy" or "Trade" on the platform. Enter the stock symbol of the company you want to buy. Specify the number of shares you want to purchase. Choose the type of order. For beginners, a "Market Order" is usually your go-to pick. This means you're willing to buy the stock at the current market price.

• View and Buy:

Review your order to make sure everything is correct.

Click "Place Order" or a similar button to execute the trade.

• Confirmation:

After placing the order, you should receive a confirmation. This will include details of your purchase, such as the number of shares bought, the price, and any fees.

You did it!

Something I want you to keep in mind — stock prices can fluctuate, they can go up and down! It's a good idea to start with a small amount and gradually increase your investment as you become more comfortable and knowledgeable. Start and build! 

Another thing I would call out is for you to set up alerts or notifications on your brokerage platform to keep track of your investments. 

Ask questions in the comments or book a session with me to talk about investing or your portfolio! If you want to invest a little, my course “The Scale Is In The Start” actually walks you through it! 

I’m excited that you’re an investor now and will continue to do it no matter how the economy moves. 

What was your first stock? Mine was T-Mobile when they gave away a free share. My first big girl stock purchase? Good ole Jeff Bezos or Amazon stock. I bought it via fractional shares! 

Your turn, investor!