1. Determine Your Approach
There are several ways to approach stock investing. Which of the following statements best describes you?
I’m an analytical person and enjoy crunching numbers and doing research.
I hate math and don’t want “homework.”
I can dedicate some time each week in stock market investing.
I like to know about the companies I can invest in, but don’t have any desire to dive into anything complicated.
- I’m a busy professional and don’t have the time to learn how to analyze stocks.
The good news is that regardless of which of these statements you agree with, you’re still a great candidate to become a stock market investor. The only thing that will change is the “how.”
2. The Investment Budget
First, let’s talk about the money you shouldn’t invest in stocks. The stock market is no place for money that you might need within the next five years, at a minimum. How much money do I need to start investing in stocks? The amount of money you need to buy an individual stock depends on how expensive the shares are. (Share prices can range from just a few dollars to a few thousand dollars.)
3. The Investment Account
Generally speaking, to invest in stocks, you need an investment account. For the hands-on types, this usually means a brokerage account. And opening a brokerage account is typically a quick and painless process that takes only minutes. you should consider a few things before choosing a particular broker like the type of account, the features or the cost.
4. The Portfolio Management
Here’s one of the biggest secrets of investing, courtesy of the Oracle of Omaha himself, Warren Buffett. You do not need to do extraordinary things to get extraordinary results. (Note: Warren Buffett is not only the most successful long-term investor of all time, but also one of the best sources of wisdom for your investment strategy.)
The most surefire way to make money in the stock market is to buy shares of great businesses at reasonable prices and hold on to the shares for as long as the businesses remain great. If you do this, you’ll experience some volatility along the way, but over time you’ll produce excellent investment returns.