Investing can be nerve-wracking for a first-timer. There are different ways you can choose to invest, like stock options or restricted stock units, and there are plenty of stock funds from which you can invest your money. Stocks are a complicated business, but they’re not impossible to understand. Here are three things you should know when it comes to investing in stocks.
Understand the investment methods
Your first step is to decide which investment method you’ll take on. When investing, there are two main avenues you can take: either a do-it-yourself investment strategy or one that’s managed by a professional.
If you’re a more hands-on kind of person, you may want to invest on your own terms and without much assistance. In that case, you’ll want to research which stock brokers to work with. However, if you want a bit more guidance when investing your money, you may want to seek out an advisor. The neat thing about modern stocks is that you can work with advisors entirely online.
Likewise, picking out the kind of stock you’d like to invest is important. There are different kinds of stocks you can get involved in, with some being more hands-on than others. For example, an RSU (restricted stock unit) acts as a grant that accrues interest over time and is accessible to you on a set “grant date,” which is when you are allowed to pull out those funds you’ve invested each year. There are also stock options, which allow you to buy a set number of shares at a certain price in the hopes that they’ll accrue interest as the company earns value. Making choices like this, rsu vs options, is an important part of deciding how you want your money invested.
Pick the type of account you’d like to open
Like methods, the type of account you open will determine how much work you’ll have to put in. If you want more control over your investment, a brokerage account may be the better option for you. A brokerage account is a quicker and cheaper account option, however, it’ll require more stock market research on your part.
If you’d prefer that someone else manages your account for you, a brokerage account may not be for you. Rather, a robo-advisor account may better suit your needs. The robo-advisor service you choose will ask you what goals you have in terms of investing and will do the legwork necessary to get you invested in some stocks. There are some management fees to this option, but it comes in handy if you are a first-time investor.
Set a budget and start investing
New investors have two questions they should ask themselves. How much money do they plan to put towards investments, and how much do you need to start investing? The amount of money needed to buy stock depends on the cost of the share. If you have a small budget, you’ll want to make sure you aren’t looking at funds that have a minimum. For example, mutual funds often require a minimum of $500 to $3,000. Being cognizant of which funds to put money into and how much you have invest is important to ensuring you don’t lose all your money.
Investing money into stocks and funds isn’t an easy task, especially if this is a new endeavor for you. Don’t be afraid to do your research and ask questions about the process. Reach out to professionals and pick their brains about what could be the best investment for you. The last thing you’d want is to make a rash investment and lose large amounts of your own money. Take the time to look into which methods work best for you.