A Guide to Stocks Investing Basics

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Were you aware that more than half of US households invest in the stock market? An active stock market presents lucrative opportunities for individuals that are interested in getting involved with investing.

If you are interested in getting into the stock market but are brand new at investing, the vastness of the market can be intimidating.

Here are the investor basics to know so that you can get your foot in the investing door.

Set Your Goals

Before you can begin investing, you need to have a clear idea of what your goals are. Ask yourself if you want a short-term or long-term investment plan.

Risk tolerance is another concern. Risk tolerance refers to how much risk you are willing to take or how much risk you can afford.

You want to also know what kind of investor you are. Do you want to be active in the investing process, or do you want to set the investment and not monitor it? Depending on whether you want to be an active or passive investor, your investing strategy and goals will change.

Consider the Budget

Setting an investment budget is a stock investment basic that is crucial because it will have an impact on how aggressively you invest. You want to take a look at several factors:

  • Your expenses
  • Net worth
  • Overall debt
  • Financial goals
  • Risk tolerance

Learn About the Different Funds and Stocks

Investing in stocks cannot be done successfully if you do not have at least a basic understanding of the various funds and stocks out there.

Stocks, which are a security for stockholders, allow people the chance to own a part of a company. You also have mutual funds, which are actively managed by a manager, and which allow many investors to pool their money for investment.

Index funds are another option you will want to know about. These are mutual funds that invest on companies in a particular index.

Looking to experts in the field can be helpful when trying to pick solid long term stock investments.  Solomon’s Picks was actually created for just this purpose.

Choose an Investing Account

Before you choose an investing account, you need to already know if you want to be an active or passive investor.

For passive investors, you want to consider brokerage accounts, which will do the investing for you. You also have robo-advisors. Investments based on algorithms can be an exciting way of diversifying your portfolio.

If you prefer an active investment strategy, go with actively managed funds.

Manage Your Portfolio

When you manage your portfolio, you start to make investments. You can buy stocks, index funds, or any other options by using their specific codes on your account. 

Consider setting up automatic deposits to the portfolio every month to save yourself the trouble of doing it by hand. You can also reinvest earnings to maximize your results.

Get Investment Strategies

If you want to start investing in stocks, speak with an expert like Solomon. He developed Solomon’s Picks to highlight potentially undervalued public companies and undervalued stocks you likely have never heard of, that are believed to be good investment vehicles for long term growth.

Check out Solomon’s Picks for more information.