Advisors, including myself, will tell you it’s difficult to perfectly time the market. No one knows when it’s going to be the perfect time to buy or sell. We don’t know the next “hot tip” nor do we have inside company information. What we do know is what history has shown us about the stock market. Although history cannot perfectly predict the future, it has provided us with useful data that can be used to make smart investing decisions.
Here is what we do know:
- Dollar Cost Averaging is a prudent strategy. You pick a stock, exchange-traded fund (ETF) or mutual fund and you invest the same amount at the same time regardless of what is going on in the market.
- There will always be market corrections. During these downturns, there are opportunities to buy securities that are trading at a discount.
- Diversification is the key to shielding your portfolio against bear markets. Spread your “eggs” across different baskets. Having all your money in one investment is risky.
- Most investors are not active traders. Actively trading your portfolio does not guarantee you will make money. A buy and hold strategy is a tried-and-true strategy for long-term investing.
- The Stock Market has corrected, pulled back, and crashed. It has always come back.
There are opportunities to be successful in a down market. All you need is a strategy and discipline.
If you want to learn more about investing in stocks, visit “She’s So Wealthy Academy”
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I am learning on a daily basis that people want to buy stocks, they just don’t know how. They don’t know where to start, who to call, or where to go. If you are one of those people, I GOT YOU! First, let me say this one thing. You can start investing on your own however, I always encourage new investors to get professional help. Getting professional help can minimize costly money mistakes. If you are new to investing and have limited assets, you want to avoid as many mistakes as possible.
Here are a few ways to start investing in stocks.
- Buy the individual stock. There are many ways you can buy an individual stock. One, you can open an account at a Brokerage Firm like Charles Schwab, E-Trade, TD Ameritrade or any other similar firm. Keep in mind, there may be a minimum to open an account. Two, you can use an online app like Robin Hood, Acorn or Stash. Many of the online apps are for the investor who can do everything on their own. You may have limited help. Lastly, you can buy stock directly from the company through their Dividend Reinvestment Plan or DRIP. For example, if you want to buy ABC stock, you would call the company DIRECTLY and set up an account to make monthly purchases of the stock.
- Buy Exchange Traded Funds (ETFs). Instead of buying stocks individually, ETFs allow you to buy a “basket of securities.” Because you are buying a basket of securities, ETFs are considered to be well diversified. ETFs also have the ability to be traded like a stock. They are bought and sold throughout the day on the market exchanges. Just like with individual stocks, you will need to open an account with a firm or online app.
- Buy a Mutual Fund. Mutual funds are professionally managed portfolios. Essentially, investors’ money is pooled together to purchase shares of different securities. Mutual funds can be made up of stocks, bonds, CDs, commodities or a mixture of these. They typically have higher fees than individual stocks and ETFs. As well, there is typically more turnover than an ETF. You can purchase mutual funds through a firm, an online app or sometimes with the mutual fund company. You are likely to see mutual funds offered through employer retirement plans.
These are 3 of the most common ways to get exposure to stocks. There are more ways, but they are usually reserved for more sophisticated or speculative investors.
I’m here if you need me!