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What is the best way to start investing in the stock market

I am interested in this topic because I want to begin investing in stocks

I am in grade 11

I want to have multiple streams of income when I am older and the stock market is one of those potential streams.


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Prashanth’s Answer

Hi Shane,

I hope you’re doing well & wish that you have a great week ahead.

Given below are some steps to invest in stocks

1. Decide how you want to invest in stocks
There are several ways to approach stock investing. Choose the option below that best represents how you want to invest, and how hands-on you'd like to be in picking and choosing the stocks you invest in.

I'm the DIY type and am interested in choosing stocks and stock funds for myself." Keep reading; this article breaks down things hands-on investors need to know, including how to choose the right account for your needs and how to compare stock investments.
I know stocks can be a great investment, but I'd like someone to manage the process for me." You may be a good candidate for a robo-advisor, a service that offers low-cost investment management. Virtually all of the major brokerage firms offer these services, which invest your money for you based on your specific goals.
Once you have a preference in mind, you're ready to shop for an account.

2. Choose an investing account
To invest in stocks, you need an investment account. For the hands-on types, this usually means a brokerage account. For those who would like a little help, opening an account through a robo-advisor is a sensible option.

An important point: Both brokers and robo-advisors allow you to open an account with very little money.

An online brokerage account likely offers your quickest and least expensive path to buying stocks, funds and a variety of other investments. With a broker, you can open an individual retirement account, also known as an IRA, or you can open a taxable brokerage account if you’re already saving adequately for retirement elsewhere.

A robo-advisor offers the benefits of stock investing but doesn't require its owner to do the legwork required to pick individual investments. Robo-advisor services provide complete investment management: These companies will ask you about your investing goals during the onboarding process and then build you a portfolio designed to achieve those aims.

This may sound expensive, but the management fees here are generally a fraction of the cost of what a human investment manager would charge: Most robo-advisors charge around 0.25% of your account balance. And yes — you can also get an IRA at a robo-advisor if you wish.

3. Know the difference between stocks and stock mutual funds
For most people, stock market investing means choosing among these two investment types:

Stock mutual funds or exchange-traded funds. Mutual funds let you purchase small pieces of many different stocks in a single transaction. Index funds and ETFs are a kind of mutual fund that track an index; for example, a Standard & Poor’s 500 fund replicates that index by buying the stock of the companies in it. When you invest in a fund, you also own small pieces of each of those companies. You can put several funds together to build a diversified portfolio. Note that stock mutual funds are also sometimes called equity mutual funds.

Individual stocks. If you’re after a specific company, you can buy a single share or a few shares to dip your toe into the stock-trading waters. Building a diversified portfolio out of many individual stocks is possible, but it takes a significant investment.

The upside of stock mutual funds is that they are inherently diversified, which lessens your risk. For the vast majority of investors — particularly those who are investing their retirement savings — a portfolio comprised mostly of mutual funds is the clear choice.
But mutual funds are unlikely to rise in meteoric fashion as some individual stocks might. The upside of individual stocks is that a wise pick can pay off handsomely, but the odds that any individual stock will make you rich are exceedingly slim.

4. Set a budget for your stock investment
New investors often have two questions in this step of the process:

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.) If you want mutual funds and have a small budget, an exchange-traded fund (ETF) may be your best bet.
How much money should I invest in stocks?
If you’re investing through funds — have we mentioned this is the preference of most financial advisors? — you can allocate a fairly large portion of your portfolio toward stock funds, especially if you have a long time horizon. A 30-year-old investing for retirement might have 80% of his or her portfolio in stock funds; the rest would be in bond funds. Individual stocks are another story. A general rule of thumb is to keep these to a small portion of your investment portfolio.

5. Focus on the long-term
Stock investing is filled with intricate strategies and approaches, yet some of the most successful investors have done little more than stick with the basics. That generally means using funds for the bulk of your portfolio
The best thing to do after you start investing in stocks or mutual funds may be the hardest: Don’t look at them. Unless you’re trying to beat the odds and succeed at day trading, it’s good to avoid the habit of compulsively checking how your stocks are doing several times a day, every day.

6. Manage your stock portfolio
While fretting over daily fluctuations won’t do much for your portfolio’s health — or your own — there will of course be times when you’ll need to check in on your stocks or other investments.

If you follow the steps above to buy mutual funds and individual stocks over time, you’ll want to revisit your portfolio a few times a year to make sure it’s still in line with your investment goals.

A few things to consider: If you’re approaching retirement, you may want to move some of your stock investments over to more conservative fixed-income investments. If your portfolio is too heavily weighted in one sector or industry, consider buying stocks or funds in a different sector to build more diversification. Finally, pay attention to geographic diversification, too.

All of the above guidance about investing in stocks is directed toward new investors. But if we have to pick one thing to tell every beginner investor, it would be this:
Investing isn’t as hard — or complex — as it seems. That’s because there are plenty of tools available to help you.

For more information please visit the source of these information given below
Source : https://www.nerdwallet.com/article/investing/how-to-invest-in-stocks

Hope this answers your query
Good Luck 😊

Prashanth TM

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Edwin’s Answer

Hello Shane,

It's amazing how you're thinking about starting into stocks. I didn't start until my junior year of University.

I would recommend keeping up-to-date with the news. Understand where certain Trends are. Another great resource is YouTube and just listening to what other people have to say. Also, I've been really helpful to listen to others. However, you do need to understand that these are other people's assumptions and predictions. I would not recommend investing a lot of money, all at once, on a single stock.

Prashanth Did a great job and he gave a lot of his amazing advice!


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Simeon’s Answer

Like the people above have said, you'll want to educate yourself on what is safe investing, but ETFs are pretty solid bets as they have pretty consistent performance records. The Robinhood app is a pretty quick way to get into investing since you can buy fractions of shares. I'd look at Two Cents on YouTube for videos explaining a lot of investing concepts in an easy to understand format.