Journey Towards Investing: How to Start Investing and Things You Need to Know

What are Securities?

 

Securities are assets that you can buy and sell (also known as financial assets you can trade). Many people buy securities and hold them with the chance that these securities increase in value. Examples of securities include stocks, bonds, mutual funds, trusts, etc. Securities are the vehicles you use to start investing. Additionally, if you want to start investing in securities, you will have to create an investment account.

 

Opening an Investment Account

 

Usually, you have to open an investment account through a brokerage firm or financial institution. Some of these firms or institutions might require a minimum deposit in your investment account. However, these deposit amounts depend on the firms’ rules/regulations.

 

The people that manage your account are called brokers. There are two types of brokers: full-service and discount brokers.

 

A full-service broker offers a range of services for his or her clients, but they only deal with clients who have a high-net worth. As a result, middle-class individuals such as ourselves might not be able to afford the services of these brokers. Moreover, it may be common to see minimum deposit amounts for accounts with these brokers to be at least $10,000 or higher.

 

This is where discount brokers come into play. Discount brokers have considerable low fees, but the down side to them is that you make all investment decisions and can’t call and ask for investment advice.

 

An extension of dealing with discount brokers is that they offer online trading platforms for you to use to invest in the securities of your choosing. You might have heard about trading platforms like Think or Swim by TD Ameritrade, Robinhood, Etrade, etc.

 

Costs of Investing

 

If you invest in stocks, for every trade that you do, whether that be buying or selling, you incur a commission. Commissions are trading fees that are one of the ways that brokers make their income.

 

If you invest in mutual funds, you incur management fees and sales charge/load (depending on the fund you choose).

 

First Step to Investing

 

I would advise anyone who is interested in investing to create a paper trading account. Specifically, a paper trading account is an account that simulates real market conditions when it comes to investing and you are using paper/simulated money and not actual money. Most people use this to get their feet wet to learn how to invest in stocks and other securities like futures, options, or forex. I first started to make an investment account with Investopedia and it was extremely helpful. It is packed with how to’s and tutorials to help you navigate and understand certain concepts and ideas.

 

Currently, I am using Think or Swim paper trading, and it fully captures the investing experience for me due to its charting software and additional resources.

 

Additional Resources

 

Below are all of the resources that I used to help me with my investing journey and I am sure they will help you as well. DISCLAIMER: Most of the information used in this post are a summary of the information presented in these resources. I do not claim them as my own. This post is merely a way to make things easier for anyone who wants to begin their investing journey. This will serve as a small piece of financial independence.

 

How to Start Investing in Stocks: A Beginner’s Guidehttps://www.investopedia.com/articles/basics/06/invest1000.asp

 

How to Invest in Stocks:https://www.nerdwallet.com/blog/investing/how-to-invest-in-stocks/

 

Guide to Stock-Picking Strategies:https://www.investopedia.com/university/stockpicking/

 

Mutual Fund Basics Tutorial:https://www.investopedia.com/university/mutualfunds/

 

Learn about Mutual Funds Before You Invest:https://www.thebalance.com/what-are-mutual-funds-2466587

 

Top Tips for Picking a Winning Mutual Fund:https://www.thebalance.com/picking-winning-mutual-funds-357957