For one, you’re going to see a lot of terminology when you start investing, like margin, P/E ratio, rebalancing and limit. Chances are, some of it will make your head tilt. Before you dive into the world of DIY investing, get familiar with the terms you’re going to see.
On the other hand, you might also have some questions that, frankly, no one else can really answer.
What should you invest in?
One question people often ask when faced with investment decisions is how to know what they should be investing in. Maybe I could quote Warren Buffett for you here because I’m sure he has said something about what to invest in. But, again, because I am not a financial advisor, I won’t tell you what to buy. In reality, even Warren Buffett couldn’t tell you what to invest in. It’s entirely up to you to decide what’s important. I have friends who choose to invest in green tech, others who like the couch potato method, some who go in on Tesla and others who are in on cryptocurrencies.
Whatever you decide to buy, I can’t stress enough that it’s a good idea to do your research and talk to experts such as an advisor. You can read a company’s annual report or look at the company information on your brokerage’s website. Some resources, for example, have a quotes/research section where you can look up information on equities, exchange-traded funds (ETFs), mutual funds and guaranteed investment certificates (GICs) and get analysis research, technical analysis, and earnings and revenue.
How much should beginners invest?
Another question people usually have a tough time answering is how much money they should start investing with. This is ultimately up to you, too. The great news is that a lot of brokerages and robo-advisors do not require you to have a lot of money to invest, so you can start at any level that’s comfortable for you. In fact, you could even open an account with no money. What’s more important is to understand your personal goals with investing.
Remember: This is an overview. I know it might be a lot to take in. But investing doesn’t have to be stressful, and you don’t need thousands of dollars to start. You may not be able to buy Amazon stock right now, but there are other options out there. If you’re committed, you’re more than capable of making it happen for yourself. All you have to do is start.
Excerpted from Money Myths: A Finance Guide for Solo Earners by Renée Sylvestre-Williams, available as an e-book and an audiobook. Published by Scribd Coach, an imprint of Scribd, Inc., June 14, 2022.
Read more from Renée Sylvestre-Williams: