Introduction to investing
Introduction to investing- investing guide for beginners.
You're never too young to learn about investing. Your parents can even open you a custodial brokerage account, where you can buy and sell stocks.
But before you start investing you have to know the types of stocks.
1.Single stock: A single stock is a share of a company like Amazon ,Tesla, Nike or any public company. Different companies have different share prices. The share price fluctuates with supply and demand. If there are lots of people that want to buy shares but not enough people willing to sell then the prices go up. The goal for investing is to buy low and sell high.
2.index funds: Have you ever heard of the S&P 500, or large cap. Well those are indexs. Index funds diversify their investments into lots of different single stocks. An S&P 500 features the top 500 companies. Index funds are usually safer than single stocks because they have less fluctuation. The price of an index fund goes up and down depending on the price of the stocks it holds shares of. If you buy a share of an index fund you are buying shares of all the companies the index fund owns. There are two types of index funds: mutual funds, and ETFs. ETFs actively trade throughout the trading day while mutual fund trades close at the end of the trading day.
There are indexes, and actively managed funds. Actively managed funds try to beat the market. The disadvantage of an actively managed fund Is the expense ratio. An expense of 1% means that you have to pay one percent of your earnings to the mutual fund, or ETF. This affects your investment profit. Single stocks have no expenses.
You can check on how your stocks are doing by looking at their graph. The graph shows you the stock's fluctuations when the stock goes up and down.
Dividends: A dividend is the distribution of some of a company's earnings. to a class of its shareholders. Growth stocks don’t usually pay dividends because they use that extra money to grow their company. Examples of growth stocks are: Tesla and robinhood marketplace.
Companies that are no longer looking to make huge growth usually pay dividends to their shareholders. Examples of non growth stocks are Nike and Disney.
If you are interested in buying shares of your favorite company’s. Or index funds you can invest using a brokerage account, some brokerage apps that my brothers, and I have used to trade our stocks in the past are:
1: Fidelity, https://www.fidelity.com/
2. Robinhood, https://robinhood.com/us/en/
3. Webull, https://www.webull.com/
4.merill edge, https://www.merrilledge.com/
There are Lots of things you can invest in like real estate, Bonds, and cryptocurrencies. But stocks have always been my favorite. If you choose the right stocks, and invest long term you are guaranteed to see your money grow. It might take a while though, so don’t get scared and sell if you see your stocks drop in price. At the end of the race. It's the Long term investors that make money.
Learn more about investing:
Past performance is not a predictor of future results. investment results may vary. All investing involves risk of loss. I own shares of robinhood.
By Kai Stanton Holloway