Investing for Beginners
Investing has changed quite a bit over the last couple decades. It used to be something that was sort of cost-prohibitive to the middle class, and now with online brokers charging next to nothing to buy or sell a stock, investing has become much more accessible to the general public.
Like many, I was pretty intimitidated by the whole thing when I started. But after opening an account at Sharebuilder I realized there really isn’t that much to be afraid of. I read a few good books on investing (which I will talk more about later in this article) and opened an account, picked a few stocks, and viola – I was a beginner stock investor.
I will say this, if you are just starting out – there is generally a little more inherent safety in purchasing a mutual fund rather than a single stock. Also, I recommend having reached some of the more basic financial goals like getting out of debt and creating an emergency fund before getting too heavily involved investing.
Do it yourself or get help?
I happen to be a do-it-yourselfer when it comes to investing. But, to be honest I am a do-it-yourselfer in most areas of my life. There are always going to be people who prefer to install the ceiling fan themselves rather than hiring help. And there are always going to be people who prefer to hire someone. Personalities and circumstances will often lead people to choose one over the other.
Help costs money
As with anything, when you get help it is going to cost you – but (in theory) the help that you hire very well might prevent you from making a big mistake. If you do hire someone, the key is to find someone who shares your values and is someone that you can trust. I have begun to put together a directory of Christian Financial Planners. So if you are looking for someone in your area, check the directory to see if you find a good fit.
Like I mentioned earlier, I opened my first online brokerage account at ShareBuilder. I love them because I can buy stocks for $4, they allow me to purchase fractional shares, and they don’t have any account minimums or inactivity fees. I have also opened an account at Zecco.com – which I also like and their features are very similar.
I haven’t tried out TradeKing yet, but I have heard good things about them from many sources, so I have them listed below as well. If you have any comments about any of them or other great online brokers, please let me know!
|Stock Trades||$4.95 / trade||$4 / trade||$0 – $4.50 / trade|
|Minimum Balance||$0||$0||$25,000 – $0|
|Notes||TradeKing has received kind words from Smart Money magazine about their customer service.||ShareBuilder allows you to purchase fractional shares. Also, real-time trades cost $9.95||Zecco.com offers free stock trades with a $25,000 balance. Otherwise trades cost $4.50 each.|
Books great for beginner investors
As you begin to do more research on investing, you will find that there are many different strategies. There isn’t necessarily only one way to make money in the stock market, but my opinion is that the wisest way is to buy good companies and hold them for a long time. Personally I think that is the best and safest way to invest.
As an investor I really admire Warren Buffett and his approach to investing. His mentor was Ben Graham who wrote probably the most respected book on investing called The Intelligent Investor. It isn’t a light read, but it is a great one.
If you are someone just looking to know what mutual funds to choose in your 401k – I don’t think I have found a better book than James O’Donnell’s The Shortest Investing Book Ever. It is basically like having an advisor sit down with you and tell you which funds to invest in.
Below are a couple more classics I recommend…
A few articles great for beginner investors
- 3 Keys to Safe & Successful Investing
- The importance of investing in your beliefs
- Stock Market basics for new investors
- What is an IRA?
- 3 Stock Investing Traps to Avoid
- Can You Own Real Estate Within your IRA?
- Diversification strategy from the Bible
- Should you convert your IRA to a Roth?
- Variable Annuities: Pros and Cons
- Best college savings plan: the 529?
- What are ETFs?
- How to donate Stocks to charity
- 2 safest ways to invest in real estate