Even with the world reeling from a coronavirus-sized punch to the gut, many are still taking up the call to become investors. However, there are still a number of questions holding potential investors back from getting started:
- How Much Money Do I Need To Start Investing?
- Can My Investment Go To Zero?
- When Is The Next Recession?
It can be overwhelming and you could have a million questions whirring around your head, most of which the team here at MyWallSt can answer for you. But for now, the simplest answer we can give you about when to start investing is the same for everyone:
Why should I buy stocks?
Owning a stock means that you own a part of a company. Think of something you use every day — for me, it’s Netflix (NASDAQ: NFLX) — wouldn’t you like to own part of that thing you use so much?
Not only that but in the long run, you’ll typically earn more money from investing than in a savings account. While money kept in savings gets eaten away by inflation, invested money is working for you 24/7. Unlike a bank account, your original outlay can multiply many times over if you invest in the right companies.
On average, the stock market has returned around 10% annually since 1974 (without factoring in inflation). That easily beats the 0.09% you’ll get by keeping your money in a savings account.
What are you waiting for?
Why should I start investing now?
There is never a better time to get started investing than the present and now is no exception. Sure, the coronavirus has caused some panic in the market, as the Dow Jones (DJINDICES: ^DJI), S&P 500 (NYSEARCA: VOO) and Nasdaq (NASDAQINDEX: ^IXIC) bounce up and down on a daily basis, but this could be the perfect opportunity for a newbie.
(If you’re unsure about the difference between different indexes, try this article: What’s The Difference Between The Dow Jones And The S&P 500?)
On one hand, the market is very volatile, with the likes of Tesla (NASDAQ: TSLA) and Virgin Galactic (NYSE: SPCE) having months of gains wiped away in a matter of weeks. On the other hand, titans of industry such as Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Google (NASDAQ: GOOG), are falling to prices they haven’t been available at in years.
Might we call this a bargain?
How to start investing
It’s never been simpler to start investing in stocks, and you can start with as little as $10. All you need to do is open up a brokerage account, which is super easy through the MyWallSt app, and when you’ve added money to your brokerage, invest in whoever you want. Just pick the stock, invest the amount you want, and bam! You’re an investor.
You can even make money off small investments because thanks to fractional investing you don’t need to buy entire shares. Even $10 goes a long way; just ask early investors in Apple. If you had bought a single $22 share during Apple’s 1980 IPO, thanks to growth and stock splits, it would now be worth roughly $15,000. Not bad for a throwaway 22 bucks!
What stocks should beginners invest in
This is one of the first obstacles to stump a new investor. With more than 3,000 listed companies in the U.S. alone, some people like to begin with an investment that covers several stocks at once, such as an exchange-traded fund (ETF).
This is a mechanism for investing in a range of stocks with a single purchase. The S&P 500 is a perfect example of this as it is a collaboration of the 500 largest companies that trade on the American exchanges.
If you’re ready to invest in individual stocks, then make sure it is a company that you believe in, has a good reputation as a corporation, and a forward-thinking business plan. Then all you need to do is follow MyWallSt’s golden rules:
- Get started (just do it).
- Think long term (it’s all about patience).
- Buy what you believe in (don’t buy something you don’t understand).
- Never borrow to buy (stocks bought on borrowed money aren’t yours).
- Diversify your portfolio (minimum of 12 stocks across 6 different sectors)
- Invest what you can, when you can (speaks for itself)
If you’re looking for more details on why you should get started, read about our Chief Investor and Co-Founder Emmet Savage here.
And finally, make sure to have fun!
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.
Editor at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.