The stock market is too scary!
That’s what so many people think and it makes them shy away from this powerful wealth-building tool. Everyone is supposed to have access to it, but that isn’t entirely true and few people take real advantage of it.
To help make investing in the stock market a little less scary (because it really isn’t, we promise), we have 3 beginner stock market tips for you. Check them out!
1. Work on Your Mindset
Working for your money is a good way to make money. If you’re lucky (or work hard and position yourself well), you’ll make enough money to enjoy a comfortable lifestyle. However, you’ll never get rich working. Talk to any rich person and they’ll tell you they don’t work for their money, they put their money to work for them.
Wondering how this works? Let’s look at an example.
Say you invested $5,000 in the stock market at age 25. The stock market is quite volatile so some years you’ll make more than others and some years you’ll lose money. But over time the stock market steadily averages a 10% increase.
If you put that $5,000 there and don’t touch it, when you turn 55, you’ll have a little over $87,000. Now, add a monthly contribution of just $100. At age 55, you’ll have a whopping $284,000 with a total contribution of only $41,000!
If you put that $5,000 in a regular bank savings account with an optimistic interest rate of .10%, you’ll have an underwhelming $5,152 over the same time period. What a difference!
2. Getting Started
How do you get started investing? Understanding all the numbers and stockbroker fees and how to pick investments is a little overwhelming. Okay...a lot overwhelming.
On top of that, single shares can be expensive, forcing you to invest large amounts that you might not be comfortable investing in just yet.
Thankfully, there are easy methods of stock investing for beginners. Apps like Public put the world of investing literally in the palm of your hand. This one works by breaking up shares of companies into tiny little pieces called fractional shares, allowing you to invest with as little as $5. You can invest in both the stock market and ETF funds using this app. Oh, and all the trades are commission-free. Pretty exciting!
It also works like a social media platform for investors. You can share your experiences with other users as well as ask questions and hear about other investors’ experiences. This can help you learn the process and get great feedback on companies that you might be interested in investing in.
Have a favorite celebrity? You can even follow them on the app and learn about their favorite companies to invest in.
3. Be Disciplined
Now, like we said, you can invest $5,000 in the stock market and forget about it. In 30 years, you’ll be able to enjoy about $87,000. However, by being disciplined about your investing, you can grow that $5,000 even more.
As we mentioned, just $100 a month makes a $200,000 difference. Imagine if you could invest $5,000 a year! You’d have nearly a million dollars with your actual contributions adding up to only $155,000. See how much of a workhorse the stock market can be?
Unfortunately, it can be easy to prioritize other things over your stock market investments. A new car or a vacation in Italy right now sounds more exciting than waiting for your money to slowly grow. However, future you will be so grateful to present you if you can stay the course. Imagine the vacations you could take when you retire with nearly a million dollars to your name!
An easy way to keep up with your contributions is to set up recurring monthly contributions. Then your money goes where it should without you even thinking about it.
🌊 Ride the Waves
The best way to make money on the stock market is to buy low and sell high. Unfortunately, many people end up doing the exact opposite, which is part of what scares them away from future investing.
The market is extremely volatile. One year it can be soaring and your money earns an astonishing 35%. The next year it can come crashing down and you’ll lose 15%.
When it’s going up, people get excited and start investing more. If they do this when it’s near the peak, they end up buying high. Then when the market starts to fall, they panic and pull their money. Now they’ve sold low and almost certainly lost money.
Ride out the peaks and valleys and don’t make emotionally charged buying and selling decisions.
The market will eventually even itself out again and you can expect that steady 10% increase — but you won’t get it if you make this mistake.
On another note, don’t try to “time the market” or predict when a stock is going to go up or down. Even the best experts can’t predict when the tide will turn and you’ll only end up frustrated and probably lose money.
The best method is the most simple, do your research and pick stocks that you think will do well. Then, invest your money and stay the course.
🏁 Start Today!
Time is your biggest ally when it comes to investing in the stock market. The earlier you start, the harder your money will work for you. Apps like Public.com make stock investments for beginners easy, especially when you can start your investment with only $5. Combine that with automated investing through recurring monthly contributions and wealth-building becomes easy. You can get started with investing just $1 in your favorite stock or ETF. Make sure to use our link to get $10 on when you start investing with Public.
As always happy investing and trading and remember that financial freedom is right around the corner!