Best ways to start investing in the stock market

Photo+by+Blogging+Guide+on+Unsplash

Photo by Blogging Guide on Unsplash

by Issac Parks, Staff Reporter

We often hear that one of the best financial decisions you can make is getting involved in the stock market. However, most people have no idea where to start – only about 50% of Americans are actively invested, and most of that percentage are people who have retirement accounts through their employer.

The stock market may seem intimidating, but it’s actually a lot easier to get involved than you think.

1. Robo-Advisors
Most people aren’t terribly interested in the stock market. They just want to throw in money and watch it grow. If you are one of those people, a Robo-advisor account is probably the best option for you. Robo-advisor accounts are similar to savings accounts. When you make a Robo-advisor account, you get to set goals such as risk tolerance and investing purposes. All you have to do is put money into it whenever you want – just like a checking account. The money you put in is automatically invested into the market. It’s extremely easy. Many major stock brokerage firms offer these services. The obvious downside to having one of these accounts is that there are management fees. The good news is that these fees are more than reasonable.

2. Retirement accounts
Opening a retirement account is another popular option for beginners. They are similar to Robo-advisors in that you don’t have to do much hands-on work. There are many different types of retirement accounts, and each of them has its own tax fees, minimum monthly contributions, etc. There are two main types of retirement accounts, 401Ks and IRAs. 401Ks are run through your employer and offer a higher monthly contribution, while IRAs are opened with brokerages like TDAmeritrade.
401Ks can be convenient because you can just tell your employer to automatically contribute a portion of your paycheck to your retirement account and will often match the amount you put in. IRAs also have their advantages. You will have more control over where your money is going and lower administration fees. One downside compared to Robo-advisor accounts is that it requires a lot more research to understand what you are getting yourself into. It is crucial to know constituents that make up your account. Otherwise, you may end up paying extra fees or getting into trouble with your broker/employer.

3. Personal Investing
If you have the time and patience to learn how to invest for yourself, it is by far the best option. You have complete control over your money and can pick the strategies you use. Personal investing has the potential to make much more money than “hands-off” accounts. However, it obviously takes a bit of work and research to get to that point. There are hundreds of different strategies you can use to be profitable in the market, which you will have to research on your own. As a basis, there are two main overarching ways to begin investing – by using fundamental analysis, technical analysis, or a combination of the two. Fundamental analysis is typically how most people envision the stock market. It has to do with looking at company financial reports, future outlook, news associated with the company, economic data, and much more.
Technical analysis involves looking at price action charts, finding patterns, and using indicators to make a purchase decision.

All of these are great options for getting started in the market. Investing only has to be as difficult as you want it to be. And who knows, maybe after doing research, you may decide that the stock market isn’t for you – and that’s okay. There are many other ways to grow your money.