How to Invest in Stocks: 2023 Guide for Beginners
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If you're an investor and planning to start putting your capital somewhere this or next year, you've come to the right place – today, Just2Trade is going to tell you about the best ways to invest in stocks online, as well as what stocks are worth your attention. So read carefully and don't forget to take some notes!
Table of Contents
Investing in Stocks: Simple Step-by-Step Guide
We'd like to provide you with step-by-step instructions – just follow each step accurately and commit to memory all the key details you need!
Step 1. Decide How You Want to Invest in Stocks
You can purchase stocks using many different platforms and accounts. Either you or a fund manager or robo-advisor can purchase equities on your behalf via an online brokerage. The most effective approach will be the one that corresponds to how much time and assistance you want to devote to the process of managing your finances.
Establish a Brokerage Account. You can open a trading account online and purchase stocks if you have a basic understanding of investing. When it comes to selecting and buying stocks, a brokerage account gives you the power.
Work with a Fund Manager. Consider enlisting the services of a financial advisor if you would like to have additional counsel and direction for setting financial objectives and purchasing stocks. An investment manager acquires and manages your investments for you, including buying stocks, after helping you define your financial goals. Financial advisors are compensated through a variety of means, including a flat annual fee, a fee for each trade made, and a percentage of the assets they manage.
Decide on a Robo-Advisor. A quick and inexpensive option to buy stocks is through robo-advisors. The majority of robo-advisors put your money in various ETF portfolios and manage your account for you by purchasing the assets. Though they are frequently less expensive than financial consultants, you rarely get the benefit of a live person to assist you with decisions and provide answers to your inquiries.
Utilize a Direct Stock Buying Program. Many blue-chip businesses offer plans that allow you to directly buy their stock if you'd prefer to invest in a small number of equities. Although many programs provide commission-free trades, you may need to pay additional costs if you sell or transfer your shares.
Remember that, regardless of the technique you select for investing in stocks, you will probably have to pay fees at some point for buying or selling stock, as well as account administration. Pay close attention to expense ratios and fees for both mutual funds and ETFs. Asking for a fee schedule or interacting with a customer service agent at an online brokerage or robo-advisor to get advice on fees you might pay as a client is nothing to be embarrassed about.
Step 2. Determine Your Investing Approach (Long Term vs. Short Term)
The second thing you need to think about is your own investing approach: will it be a short-term investment or a long-term one? Which option is better for you and why?
Actually, you are not restricted to these two possibilities. By designating a portion of funds that shouldn't be put at high risk, many investors combine a long-term investment with a short-term one. Long-term investments can be used to place the portion of the money that they desire to save since they have historically carried less risk.
Whatever route you take, please do your studies, make a plan, and develop an investing strategy that works for you specifically. Starting with a short-term investment is preferable if you are a newbie. It is less dangerous, and the outcome might be observed sooner.
Step 3. Find a Proper Broker. Open an Account to Invest in Stocks Online
There are numerous ways to invest in stocks, but it's crucial to identify your investment style before you begin. Decide if you want to use a DIY strategy or deal with a qualified financial advisor who can guide you through wealth management.
According to Rob Burnette, Outlook Financial Center's CEO, financial counselor, and tax preparer, asking yourself these two questions can help you to find the solution:
First, how much effort and time are you prepared to put into handling your accounts yourself?
How committed are you to starting your education early and maintaining it throughout your life?
You can open an online brokerage account if you prefer to manage your money independently. If you're unclear about where to begin, think about opening an account with a robo-advisor, which will handle some of the labor-intensive tasks for a cheaper fee.
There may be nothing better than meeting with a fiduciary advisor, but most advisors won't work with tiny accounts, according to Burnette. Here's what he said about it:
"Instead of relying on the person who answers the phone at a call center, the advice can be more concentrated, and you can get straight answers to direct queries."
According to him, novice investors might be able to locate a fiduciary advisor with low or no account minimums.
After you open an online brokerage account, you will be asked some questions to choose an investment plan that will help you make investment selections. Knowing your specific financial objectives, such as retirement or a major purchase, as well as your risk tolerance (the level of market volatility you can handle in your investments), will help you answer these questions.
Before you begin investing, establish your goals. These will influence how you make decisions.
In order to achieve the maximum return possible, you might want to skew your portfolio toward more investments that are growth-oriented if, for instance, early retirement is your aim. However, if you're aiming for a more immediate objective, like purchasing your first home, you'd be better off with a more moderate portfolio to reduce the chance that your investments may lose value when the time comes to make the purchase.
Working with a financial advisor might be the best course of action for you if you're unsure of how to achieve your long-term financial objectives or where to begin with your investing plan.
Jeffrey Wood, a partner at Lift Financial and a financial advisor, said:
"Many people elect to hire someone who specializes in the subject so they can benefit from their expertise and so they don't need to worry about the things they may miss or that they don't know. Having a reliable advisor you may contact with queries and concerns is helpful as well."
You can avoid making choices that might not be in your best interests by working with a financial expert. If you wish to invest in individual stocks, you should know that they may be significantly riskier than other types of securities, such as mutual funds or exchange-traded funds. Having said that, if you are unsure of the percentage of your finances you should set aside for stocks, you can work with a financial expert to create a plan.
In addition to aiding with general financial planning, financial advisors can also assist with matters like college preparation, tax and estate planning, asset protection, and supporting loved ones. According to Beckerman, "We've noticed that investors who initially used an online platform are switching over to us as their demands advance."
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Step 4. Set a Budget for Your Stock Investment
Now it's time to discuss how much you're ready to invest in stocks.
Actually, we advise you to save up to 20% of your monthly income for investments. Even in the short term, this technique will pay off, even if it requires some careful budgeting. For example, if you earn $50,000 per year, 20% of your pre-tax monthly income comes to about $830. If you put that money into an S&P 500 index fund with 10% average annualized returns, you'll have $62,000 in five years, which is enough for a down payment on a home, and $1.7 million in 30 years.
Initially, Put 5-10% into Your Retirement Account
Starting to trade stocks before maxing out their 401(k) is a common error made by inexperienced investors – money is being lost on purpose by this mistake. And we really mean that in that sense.
The main advantage of a workplace-sponsored 401(k) is that the majority of employers will match your annual payments up to 3%, and some even more. Therefore, if you earn $50,000 per year and make a 3% contribution, or $1,500, to your 401(k), your employer will also make a $1,500 contribution, for a total of $3,000.
Make sure you are maxing your 401(k), because that is the equivalent of an instant 3% raise. Additionally, even if you're self-employed and have an IRA, it's advisable to put 10% of your pre-tax earnings into your retirement account if possible.
An Additional 5 to 10% Should Be Put into a Short- to Medium-Term Brokerage Account
When your retirement is covered, put what your budget will allow into your short- to medium-term brokerage account.
It may be unsettling to invest this much of your monthly income, but one of the main benefits of stock market investing is the ability to guard against inflation. Cash in your checking or even savings account isn't actually "secure" because, if it isn't earning interest, it will only depreciate in value due to inflation.
We don't aim to scare you, but rather to make you realize that making a prudent and cautious stock market investment is inherently "safer" than leaving your money on the side.
Step 5. Manage Your Stock Portfolio
We've been led to believe by Hollywood that the only way to get wealthy is to constantly purchase, sell, and exchange stocks. In fact, the reverse is true.
The next best move is to do nothing once you've made your first few wise investments. Keep purchasing and holding, and don't touch your underlying assets.
Studies have repeatedly proven that passive investing strategies outperform active ones. Letting your investments sit and grow will not only save you time and stress but will also increase your financial gain.
Having said that, there are several circumstances in which changing up your portfolio may be a good idea. When is it appropriate to make a change-up rather than just selling some of your holdings to pay for a home?
Stocks to Invest in in 2022-2023
Now, let's have a look at the best stocks to invest in in 2022-2023 – below, you'll find all the key details you need to know.
Best 5G Stocks to Invest in
Marvell Technology Group
For a very long time, Marvell Technology Group has been a pioneer in creating data processing units (DPUs). Its chips are essential for transferring significant volumes of digital data in networking hardware and data centers. The adoption of mobile networks in enterprise applications is on the upswing, so 5G has been a logical fit for Marvell's silicon portfolio.
Marvell purchased Inphi and Innovium in 2021 to increase its exposure to 5G, the cloud, and other business solutions. The designers of network switching and fiber optics rely on the DPU technology already developed by Marvell. Marvell has a clear route to rapid growth for years to come as 5G technology develops and network adoption rises in countries all over the world.
Market Capitalization: $42.7 billion
American Tower
One of the biggest REITs and a leading tech real estate company, American Tower has more than 221,000 properties across the globe. It is largely concerned with real estate, construction sites, and locations of cell towers that are essential to the operation of both mobile networks and internet infrastructure. Additionally, it creates fiber-optic networks that link 5G small cell sites to the rest of the internet, a crucial service for mobile network operators as more individuals and companies rely on mobile service for their internet use.
Market Capitalization: $120 billion
Gold Stocks to Invest in
Barrick Gold Corp
Barrick Gold is one of the most well-known mining firms, with an average trading session seeing more than 14.5 million shares exchange hands. It is among the most valuable corporations in the world, according to its market value of more than $35 billion.
Six of the company's 14 gold mines are Tier One Gold Assets, meaning they have a minimum 10-year life expectancy and produce at least 500,000 ounces of gold yearly.
In essence, the company holds six gold assets that are the best in the business in terms of quality and predicted return.
Newmont
Newmont has a market cap worth over $47 billion. Some of the biggest gold mines, goldfields, and deposits in the world are managed by over 31,000 people.
The company currently owns 22 mines, of which 12 are surface mines and 10 are deep mines.
By creating new mines before their existing functioning mines run out of resources, Newmont continuously widens its reach. As an illustration, the two businesses inked a co-development deal for the Nevada Gold Complex in 2019. Three of the top ten Tier One Gold Assets in the world are located in the complex, which is thought to be the biggest gold production project in the world.
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Technology Stocks to Invest in
The top source of cloud computing infrastructure is Amazon.com (NASDAQ:AMZN), which is also the top online retailer. A new era for the leading digital firm began in July with the resignation of founder Jeff Bezos.
Windows PC operating system and Office productivity software are two of Microsoft's (NASDAQ:MSFT) most well-known products. In terms of cloud infrastructure providers, Microsoft is second only to Amazon.
The iPhone, iPad, and Mac computers are produced by Apple (NASDAQ:AAPL). Strong customer loyalty guarantees a large number of repeat customers, and an expanding selection of services makes Apple's ecosystem appealing.
The leader in the video streaming space, Netflix (NASDAQ:NFLX), invests tens of billions of dollars yearly in original programming to keep its subscriber base, which is constantly expanding, enthralled.
More than 2 billion people use Facebook, Instagram, Messenger, and WhatsApp every day, making Facebook (NASDAQ:FB) the largest social media firm. The business believes that virtual reality will be its future.
Healthcare Stocks to Invest in
Vertex Pharmaceuticals
One of the best-performing biotech stocks on the market is Vertex Pharmaceuticals. The company's main area of interest is the creation of medications that address the underlying causes of cystic fibrosis (CF), an extremely rare genetic disease that damages the lungs and other organs. Trikafta, a new CF medication from Vertex, may increase the number of patients that its other medications can treat by more than 50%. Along with more prevalent illnesses like type 1 diabetes, the business is also creating medications for other uncommon genetic ailments.
UnitedHealth Group
The biggest health insurer in the world is UnitedHealth Group. It is a pioneer in healthcare delivery services and runs one of the top PBMs. UnitedHealth Group is one of the most alluring payer stocks available due to the company's size, reliability, and dividend. With its upcoming acquisition of LHC Group, a supplier of home health services, UnitedHealth Group may also soon expand its presence in the healthcare provider sector (NASDAQ:LHCG).
Renewable Energy Stocks to Invest in
Renewable Energy Group Inc. (REGI)
The Renewable Energy Group is a leading manufacturer and distributor of renewable chemicals, renewable fuels, and other goods. The company is dedicated to maintaining its position as a pioneer in bio-based fuels and chemicals. It has made plans to expand the output of one of its projects. In order to satisfy client demand and provide sustainable fuel solutions, Renewable Energy Group is always evolving.
Since the beginning of the previous year, the price of Renewable Energy Group Inc.'s stock has increased by more than 260%. The company's good financial situation is further enhanced by its strong liquidity position.
Market Capitalization: $3.7 billion
Daqo New Energy Corp. (DQ)
Daqo New Energy Corp is the leading high-purity polysilicon producer for the worldwide solar PV market. The production facilities used by Daqo are very effective and cutting-edge. It is situated in Xinjiang, China, and has a 70,000 metric ton annual production capacity.
Analysts believe Daqo New Energy Stock is now undervalued and is extremely stable. The stock price can now be purchased at a reduced cost because it is anticipated to increase. Daqo New Energy is a more appealing option because analysts predict that the company's earnings will quadruple this year.
Market Capitalization: $7.32 billion
Useful Tips for Stock Investing
In addition, we'd like to provide you with some helpful tips – just read carefully and take some notes to always keep all the crucial info on hand.
Don't Forget to Diversify
By selecting a variety of investments and investment types, diversification helps you reduce the risk associated with this activity. Even in a market that is losing value, diversification doesn't ensure investment returns or avoid the risk of loss.
Invest in Individual Stocks Gradually
If – and only if – you have the time and motivation to deeply analyze and continuously assess stocks, you can invest in individual stocks. If so, we wholeheartedly advise you to do so. A knowledgeable and persistent investor has every chance of outperforming the market in the long run. However, there is nothing wrong with adopting a more passive strategy if tasks like reading quarterly financial reports and performing simple mathematical calculations don't sound attractive.
Get Investment Education
There are countless live and online courses that can teach you about money and investing. You can enroll in online courses at many colleges at any time, whether they are free or paid.
Remember that Just2Trade is always ready to help you – we have a wide range of investment tools, and you can use them to improve your knowledge in the investment world. So choose us, and your investments will have every chance of being successful and profitable!
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Stock Investing FAQ
Still have some questions connected with investing in stocks? If so, take a closer look at our FAQ list below – there, you'll definitely find the answers to all of your outstanding issues.
Should I invest in stocks?
The majority of people should invest in stocks right away.
Stock investment may be an option for those who have money they won't need for a while because it provides the biggest potential returns. The chances of a negative rather than positive impact on an investor's profits are higher if they wait to invest that money.
How much should I invest in stocks?
Typically, experts recommend that you invest 10-12% of your yearly income in equities. Therefore, if you earn $50,000 a year, you need a budget of $400 per month for investments. That comes to around $4,800 annually.
What is the difference between stocks and stock mutual funds?
A mutual fund is a collection of numerous stocks and other assets from different companies, whereas a stock is a small portion of ownership in one particular company. As a novice investor, it would be a good idea to compare the pros and cons of mutual funds over equities.
Can I invest if I don't have much money?
For starters, investing doesn't require a lot of cash. In fact, thanks to no-fee brokerages and the power of fractional shares, you can start trading in the stock market with as little as $10. Here's everything you need to know to start building your investment empire with even a tiny sum of money.
Are stocks a good investment for beginners?
For many beginning investors, stocks are excellent, but trading is probably not. For beginners, it is usually preferable to use a buy-and-hold strategy with stock mutual funds, index funds, and ETFs. Trading in stocks involves trying to time the market in order to find opportunities to buy low and sell high.
