Step 1 to Investment Profits
Step 1 to Investment Profits
A major roadblock many face when they want to invest is where to start. It can be incredibly overwhelming if you’ve never attempted to make money in the stock market before.
Recently I spoke with David Gardner, one of the three founders of The Motley Fool.
He stated that “The word ‘invest’ is largely misunderstood… so much of our work is almost trying to peel back the layers of complexity that people have added to money that have caused them not to see the truth or what they should be doing.”
That’s exactly why I started the Money Revealed project — to help make the world of finance less complex. By interviewing countless experts in the field I learned a lot.
And if you want to start investing in stocks, the first thing you need to do is find a broker.
Here’s how to get started…
Choosing the Right Broker
In order to buy stocks, you will need to open up a brokerage account. This is where you will be buying and selling the stocks that you’ve researched.
You can either open up a brokerage account online or set one up locally through a brokerage firm.
What most people don’t realize is making money with stocks is about more than just buying and selling at the best prices.
Yes, that’s a big part — but there’s another side to investing that most people overlook…
Say you buy 500 shares of a $1 stock. Then six months later, it jumps to $2, so you decide to sell. That’s a quick double, right? Not really. In fact, your total gains could be anywhere between 88–98%.
The difference depends on how much commission you had to pay to make each trade.
Commission is the money you pay to your broker to execute a trade. That means you owe him money every time you buy or sell a stock.
And not all brokers charge the same commissions. Shopping for the best deal can have a big impact on your bottom line. For stock investors, a good broker is an absolute must.
Luckily, there have never been more options for investors. This is both a blessing and a curse: Prices are lower and investor services are more personalized, but there is much more information to digest before making a decision. Before investing your hard-earned money, do some of your own research. You can’t afford to take chances on the wrong broker.
Don’t be afraid to call and speak with a customer service rep. Don’t open an account until all your questions have been answered.
You have a right to speak to someone before giving a brokerage your money.
And don’t simply choose the one with the lowest price. You may discover it is worth paying a little more. Here are a few questions you may want to ask a broker before making your decision:
- Do they have 24/7 customer service?
- Are the broker’s trading accounts insured by the Securities Investor Protection Corp. (SIPC)?
- How is the frequency of your trading habits going to affect your account and your costs?
- How much will it cost to place an order with a live broker?
- How long will it take for your order to be executed?
- Can you earn interest on cash that is not invested?
- How much independent research will you have access to?
- How easy is it to trade over-the-counter or penny stocks?
To get you started on your search, here are a few popular discount brokers:
[Please note: We do not recommend or back any specific brokerage firm. Be sure to do your research before making a decision to invest with one of the following.]
Time to Trade
Once you set up a brokerage account you can start investing in stocks.
Keep an eye on your inbox… more on stock investing — and how you can profit — in future issues.
Dr. Patrick Gentempo