I know the world of investing can be frightening, and the simple thought of risking and losing your money can be paralyzing. Our entire lives seem to always revolve around money. If you are one of few that money is simply not an issue and never will be again then congratulations, you made it. I tip my cap to you. For those of us who are not set for life and want to feel more comfortable I’d like to offer some of my knowledge, past experiences, and thoughts when it comes to buying and selling stocks.
With the outpouring of financial advice over the past few years from the explosion of social media it is a comforting thought that younger generations have seriously considered their future and opened a Roth IRA account. Or if you are a bit older and are playing catch up that’s perfectly fine, you’re still getting in the game. One unfortunate detail of the Roth is that you’re only allowed to contribute up to $6,000 a year. After you have fully funded your Roth for the year and wish to continue investing throughout the year I recommend opening a standard brokerage account. This will allow you to earn more interest or dividends investing money in a stock than compared to the miniscule earnings one gets in a typical savings account. Only invest what you feel comfortable with and make sure you do have some money in savings for emergencies because we all know that life can happen at any moment.
Now, you have funded your accounts, fantastic you still must decide what to buy. Before you begin buying everything and anything you want you should take a moment to reflect on your risk tolerance. If you are risk averse, you don’t enjoy taking on too much risk, then you are not alone. Studies have shown most people are risk averse (you hate losing more than you enjoy winning money, but I will save that post for another day). There is no such thing as a sure thing in the stock market but if you are risk averse then you would like to be as close to a sure thing as possible. There are those who are risk seeking or risk neutral and are willing to take on more risk for a larger financial gain, which I commend you but do be careful.
Picking the right stock can bring the utmost joy and confidence knowing that you were right and not only were you right, but you made quite a bit of money. On the opposite side picking the wrong stock and losing money can feel quite like being kicked while you’re already down on the ground. It hurts… a lot. Of course you can avoid all of this by buying into a S&P 500 index fund which mimics the S&P 500, an index that tracks the performance of the largest 500 companies listed on the stock exchanges, and holding on until you’re 65. The most common are VOO and SPY. I own some VOO. You can easily buy into either one of these and call it day. If you wish to dabble a bit further than buying an index fund I hope you stick around and enjoy or maybe even learn something from what I have to say.
My hope is that I can make you feel more comfortable and knowledgeable about investing in the stock market. Whether you choose to invest or not is up to you. I am not a financial advisor. I am not an investing professional. I cannot buy or sell stocks for you. I just love talking stocks, finance, and economics so here I am making my first blog and website ever. Life is too short to not get out of your comfort zone and take some chances. So here I am taking a chance to help someone learn something. If not, well at least I went for it tried to add some value to someone else’s life.