How To Decide If You Should Invest In Stocks?

Luke Fitzpatrick

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Wall Street, New York, United StatesPhoto by Patrick Weissenberger on Unsplash

The stock market can be a fruitful place. Whether you’re looking to invest small-time or big-time, there’s lots of opportunity for growth and the eventual potential for financial prosperity and freedom.

If you invest smartly, you could look at an excellent retirement portfolio by age 50. Before you invest, there are several essential questions to ask yourself about your investment. Here are some questions you should consider:

What are my goals?

One of the most critical things in investment is to set goals for yourself. It will help you be disciplined as to how you invest your money. To help you with those goals, here are some tips for those still struggling to leap — only invest what you can afford to lose.

It’s like betting; you should only put in as much as you can afford to lose. While many stock investments are profitable ventures, there’s no guarantee that yours will be, so you should be cautious about investing too much.

How much can I invest?

This is a perfectly fair question to ask yourself. You’re essentially committing to putting away however much in investments for years before they build a substantial enough profit margin even to consider withdrawing them.

Some companies will have a minimum buy-in bid of $500, some higher, some lower. If you’re struggling with deciding who to invest with, the SEC has created a handy guide to help you.

Once you have answered the question of how much and for how long, you can decide where to invest your money.

What platform should I use?

Investing your money can be an exciting prospect, and there are plenty of online options to choose from if you want to go down that route. The internet has opened up the doors of investment to many people that would previously have been shut out. There is also, of course, the more traditional route of investment.

You can use platforms like:

  • Robinhood.
  • Acorns.
  • Stash.
  • Webull.
  • eToro.

Important: Whatever platform you use, do your due diligence and check the trading fees.

The online route

If you want to buy online shares, you can expect a reasonably low buy-in rate — say, $500 (as mentioned above) can be the minimum number you’ll expect to pay. This option can also mean less guidance for you personally, and if you’re not knowledgeable about shares and how it all works, this is probably not the right option for you.

The traditional route

A more traditional route that’s probably better suited for those without the time, energy, or knowledge to devote to investment is to go and speak to an investment broker. You have plenty of options to choose from there, too, so consider going to speak to your bank and see how they might be able to help you. This option may be a better choice for those who could use some guidance throughout this process.

How do I build a portfolio?

It is often considered a best practice within investment circles to build a ‘portfolio.’ Essentially, a diverse group of companies you have investments in, so your proverbial eggs are not all in one basket. One could invest in an exchange-traded fund (ETF), a fund traded on the stock exchange.

If you have the cash to invest, you should do so in many different areas to satisfy the need to diversify your portfolio. These investments should usually be 3%-5% of the total per share, and the taxation is much easier than other asset classes, for example, crypto.

Pick your shares wisely

If you’re going to invest, it makes a lot of sense to not invest in something that is going to be constantly fluctuating. Don’t buy anything that goes up and down like a yo-yo, such as housing construction or oil prices.

You want to buy something stable and/or trend upward in value. Study the market wisely and pick your investments wisely. A financial advisor will be able to guide you through this process.

Investing in something is an exciting new way to spend your money and make it work for you and your future in the background. If you’re not feeling confident about your investments, go and speak to a local financial advisor or investment broker, they’ll be able to give you some advice.

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Academic Speaker | Freelance Journalist | I have contributed to a variety of publications such as Forbes, Tech In Asia, and The Next Web. I cover a variety of topics ranging from fintech, big data, AI, blockchain, to lifestyle and breaking news stories.

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