How to start investing in the stock market is a widely interesting and requested topic. The sole reason to invest your hard-earned dollars is to multiply your money and reduce the time it takes to make it. 

The first thing you need to start investing is a stack or stash of money that you will not need for living expenses for three to five years.  Never invest money that you may need because it never fails that when a true need arises, it will be a terrible time to get out of an investment.  

The reason experts recommend 3-5 years to put your money aside is that 3-5 years is the life cycle of an investment season. Three to five years gives an asset the time to increase or decrease and still recover. It is likely that an asset will have 1-2 poor performing years and 1-3 years up positive performing year. The issue is that market cycles can’t be predicted.

HOW TO START

Not that’s out of the way, how much money do you need to start investing? Since you are a beginner just learning and experiencing the game, don’t start with your whole nest egg. If you have no prior experience, start by listing all the material things in your life that you absolutely love.

You can list anything.  Once you have your list, take it and decipher what the most liked items are by people you know. Which ones do you hear about from others because of the joy the item brings or their ease of use.  Good stuff becomes popular and if you invest in the popular well-valued items, those buyers are making you money as a stock owner. 

(If you are struggling with any terms, hit me up at [email protected].) 

When I buy a companies stock, I become a loyal owner, and I rarely if ever bet against myself. EXAMPLE: Say you really think Amoco Gas is the best in the land, never buy another brand because you are fighting against yourself.  If I own APPLE stock, best believe I’ll never buy a Dell! Get it?

Now that you have your companies picked out and you google the trading symbol. (Every publicly-traded company has a trading exchange and symbol) Begin to read and review the companies performance over the past 52 weeks.  If it’s at an all-time 52-week high price, just watch for price dips or door openings to buy-in. Look back 5-10 years of historical data and identify any repeated cycles. 

If at this point this sounds too complicated, you can invest in a mutual fund or exchange-traded fund. 

TOO COMPLICATED

You can invest in a fund and each fund has a manager that does all of the homework for you. The managers usually have many years of experience and have supporting teams of researchers and analysts. 

Funds can be invested in with as little as $25-50 systematically per month. 

No matter which way you decide to invest, you need a place to go open an account. These are the most popular ways to open an investment account:

  • Local Banks have an investment person
  • Online Companies (E-Trade Robinhood . . )
  • Independent Financial Planners
  • Some Insurance companies like State Farm
  • Some Accountants
  • Money Apps

OPENING AN ACCOUNT

To open an account you will have to provide most of your personal details:

  • Birthdate
  • Social Security Number
  • Income Range
  • First Deposit Amount
  • Investment Experience
  • Current Banking information
  • Taxpayer status
  • State of Residence
  • Drivers License data

Depending on who you choose to open an account with, there will be a minimum investment amount. Individual planners will likely want $50,000 to $100,000 to open an account while going direct or banks may only require $100.00.

There are also performance-based money managers and they may require $1,000,000 to open an account in their fund.

You will be required to transfer or deposit funds into an account before you can place a trade. It could take up to 3-5 business days for the funds to clear and be available for trading. So don’t get excited or frustrated if you make a decision to invest on the spur of the moment and you have to wait a bit. 

TRACKING YOU ASSETS

How to start investing in the stock market when you don’t know where to even follow up on your investment. 95% of companies have mobile apps you can track and trade your investments. Even Cash App and Venmo are getting into the investment offering game.  There are a lot of gullible uninformed and uneducated people ready to give their hard-earned dollars away.  

You should watch and learn by tracking and reviewing your after-tax investments at least monthly depending on your strategy. (See Derick Gant for more details) 

WHAT ELSE

There is so much more to share but this will get you started. 

Here are some great books that give a deeper dive into getting started successfully. 

The intelligent investor by Benjamin Graham

Rich Dad Poor Dad by Robert Kiyosaki

First Time Investors Paul A Merriman (Free PDF)

DISCLOSURE

Derick Gant is a registered investment advisor and is not recommending any specific investment in this article. For specific direction and advice, please seek the counsel of a professional provider one on one.