Investing For Beginners

I was initially inspired to get started investing after learning about stocks in my Economics class in high school. In early 2017 shortly before I turned 18 I discovered the Robinhood app which was then promoted as the first brokerage to offer trading with no commission fees. I soon made my first investment of about $25 into Ford. Soon after that, I began doing research and watching youtube videos. In late 2021, I made a second account with Fidelity. Although I prefer the look and interface of Robinhood much more than Fidelity, I think Fidelity is a much more respected and trustworthy company to invest with. Robinhood has tens of millions of users and is a public company that has regulators looking over them, but Fidelity has been around longer and probably safer. Other companies like TD Ameritrade, ETrade, or Chase Bank are other brokerages that you can also use and all are trusted, respected and have been around for a long time.

The sooner you get started with investing, the more it will benefit you in the long run. The name of the game is compounding your money and the essential ingredient for that is time in the market. The most common reasons people don't invest is because they think they don't have enough money, it takes too long to make money, they are scared of gambling their money, or they don't understand it. I understand that some people are in very difficult financial positions and some people can barely afford their essential bills. However, I think it's important for everyone to do all they can to reduce their expenses and grow their income in order to put themselves in a better financial position. The important thing is just to get started investing and be consistent even if you start with one dollar. Almost everyone can put at least 1-5% of their income into investments. For the people who think it takes too long to make money or that they will lose their money, lets review some of the facts. The stock market will go up about 10% per year on average. The market will crash on average once every 6 years and the fall on average will be around 33%. If you don't have any investments, I would be more scared of not growing your money, inflation devaluing your money, or not being able to retire soon enough rather than being scared of the stock market falling for a year or two. The best thing to do is not to be too greedy or too scared, and just buy an index fund of companies in the S&P 500 or Nasdaq on a regular basis. Some examples of these stocks are tickers SPY, QQQ, VOO, and VTI.

Buying index funds is something I think everyone should do. It requires no effort and it grows your money around 10% per year. If you are interested in getting more than 10% per year, or you want more flexibility with what your money is invested into, then thats where individual stock picking comes in. This allows you to buy and sell specific companies whenever you want. This can easily be riskier because if you invest in a stock that falls 80 or 90% then you will lose almost all of your money and sometimes never be able to make it back. Compare that to an index fund which might fall 50% in the worst case scenario and is almost guaranteed to recover. However, high risk potential means high reward potential. If you pick strong companies and play your cards right then you can very well earn a lot more than 10% per year.