Steps to Take to Start Investing in the Stock Market

Most of us are aware that investing in stocks is a must if you want to get rich. Wages alone will not be what carries most people into wealth, and if you want to get rich (or even afford to retire later in life), you will need to start investing in the stock market to do so.

It wasn't too long ago that investing in the stock market was something that was difficult to do. In fact, most people could barely afford the fees it took to get a stockbroker, and even fewer were able to learn how to handle all the dizzying charts and statistics.

These days, investing has been made into an easy and affordable endeavor no matter who you are. Want to learn how to step into the world of Wall Street and not get burned? Here's what you need to know.

I got some good news and some bad news. The bad news is that you still need money if you want to make money in the stock market—at least, if you're not working with a trading firm's cash, anyway.

The good news is that you don't really need much to get started, especially when you think about how the "Bad Old Days" used to be.

You've got to remember, stock investing used to be a boys' club. It used to be that you'd need several hundred dollars in order to invest, with at least $10 of that cash going to pay a stockbroker. You also couldn't buy just one share in most cases. This meant that most people would be priced out before they started.

These days, you don't have to pay a broker just to make a trade. Stock trading apps like Robinhood allow you to trade for free, if you so choose. ETF fund companies like Stash and Acorns also allow you to trade for free.

That being said, most trading apps will require you to have at least $10 to start.

Here's some important advice that you should be aware of before you drop thousands into stocks...

While it's great that you want to start investing in the stock market, it's important to understand that it's a risky endeavor. Most of the time, investing does pay off. On the other hand, it's also possible to lose everything that you invested.

Risk management is crucial if you want to invest well. This means that you should follow these rules below at all times:

1. Never invest money you can't survive without. In the event that you incur a loss, this could lead you to having to choose between food and rent. Not fun!
2. Always diversify your stocks. Putting all your trust into one stock is a great way to maximize your risk of losing everything. Having a portfolio of at least one or two stocks makes for much better odds.
3. Never invest in something that you don't understand. Guesswork should never be involved in investing. If you don't understand it, chances are that it is not a good purchase.
4. If you see stocks dip, try not to panic. In most cases, "riding it out" is the best possible choice to make.

Next, think about how you want to invest in the stock market—and research accordingly.

Before you start investing in the stock market, you need to have a realistic idea of how you will be able to invest. Simply put, you have options and it's worth checking out which ones tend to be the best for you.

Do you want to be a deep, hands-on type of investor that chooses each stock individually? Or, are you more trusting and interested in letting financial professionals develop an ETF fund you can buy that blends stocks from the biggest companies for you?

Certain investing methods take a lot more time, effort, and capital than others. They may have better pay off, but higher risks associated with them. Here's a run-through of the three most common ways people use the stock market to make money:

• ETF Funds, Index Funds and Mutual Funds. These are funds that are created by banks, stock markets, and professionals that feature a blend of different stocks. Investing in these is a good way to reduce risk, and in many cases, can be a "set it and forget it" method of investing.
• Long-Term Individual Stocks. If you plan to keep individual stocks that you personally select for long periods of time, this is a good (but potentially risky) move. This is the traditional form of investment, and often will require a lot of research into each company. Of course, you have more risk with these companies because they can fold and turn the stock worth into peanuts.
• Day Trading. This means you buy shares and sell shares within the span of minutes, as a way to "time the market." I'm going to be blunt, this is a bad idea for beginning investors. It plays on market volatility, and frankly, often can cause huge losses—even among pros.
• Robo-Trading. Technology has allowed robotic investment advisors to help you make the best financial decision for yourself and your goals. If you are looking for a minimal effort method, this is it.

Be honest about how much time you're willing to take to learn stocks, and how much you're willing to risk. Speaking as someone who's been there, you can lose a LOT in individual stocks. That's why I personally tend to opt for robo-trading, and ETF fund-based stock portfolios.

Either way, once you figure your learning style, there are a lot of different ways you can learn the ropes and start your financial investment journey. My suggestion would be to choose a trading platform that works with your personal style.

A lot of apps allow you to learn the important details of trading on the stock market, including terminology, what to expect, and general trends.

Of course, experience is often the best teacher, which is why getting an app that allows you to experiment with fake money on a real stock market is a wise choice.

My personal advice would be to work with one that gives you a large amount of virtual cash and is linked to real-time stock exhange updates, such as MarketSim. This gives you the best experience with trading that doesn't involve buying stocks.

If you're okay with diving right in while you're beginning your learning journey, there are apps that will allow you to do that. Invest, for example, allows you to start investing in the stock market using your own money while teaching you about how to do it successfully.

The app allows you to learn about companies you want to invest in, track stock market changes, and also figure out a portfolio strategy that works with your personal style. Everything is easily laid out and explained in plain English.

People who are intimidated by all the Wall Street jargon will like Invest a lot because it breaks things down in simple terms.

If you really can't scrape together more than $5 at a time, and can't spend hours learning about new terms, there are still some pretty decent ways to invest in the stock market.

Stash, for example, allows you to invest in increments as small as $5, in professionally-created ETF funds built around different themes. Acorns takes this a step further by investing spare change from transactions into a curated fund for you.

Both Acorns and Stash allow you to automate investments, making it a great way to just "set and forget" your investments. So, if you want to start investing in the stock market without having to do too much homework, this is often your best option.

Personally, I prefer Stash, but if you want to check out Acorns, take a look at Nerdwallet's Acorns review to figure out if it's right for you.

There are a number of apps and programs that allow you to strike a nice middle ground between deep involvement and a light touch. These are called "robo-advisor" apps, and they tend to offer a nice range of different stock investment options along with financial advising services.

Two of the most common apps, Wealthfront and Betterment, tend to be the most popular because they offer good advice, tax loss harvesting, and a fairly educated-but-hands-off way of investing.

If you're looking to learn more about the stock market and find out how financial advisors would maximize your returns without having to pay a fortune to do so, this would be the best route.

Every single method you can use to start investing in the stock market is better when you actually read up on stock market news and updates about how to better manage your funds. The more you learn about new investing strategies, the better off you'll be.

A good place to start would be the actual news on the apps that you downloaded. Most of the time, these apps will give you updates and tips that better help you learn how to take care of your cash. Going on apps that give you Wall Street updates can also be seriously smart.

Not much of a reader? There are a lot of educational podcasts focused on investing that you should consider checking out. Knowledge is power; it doesn't matter how you get it—just that it works for you.

Once you start investing, you should periodically add more money.

Investing is best done with a lot of money, and the more money you set aside, the better off you'll be further down the road. Automatically adding funds to your investment is a good way to get that going without having to worry too much about remembering to invest.

Funding that investment should never be a one-time thing. If you think otherwise, you may need to check out some personal finance books that can help you understand stuff.

Or, even checking out a beginner's guide to investing could help you understand why it's important to regularly update your portfolio.

Once you start investing in the stock market, you really shouldn't stop.

Investing is one of those habits that continues to pay off. The longer you do it, the better off you'll be, since stocks tend to rely on compounded interest.

It doesn't take too much effort to see returns from what you invest in. Admittedly, you probably won't be the next Warren Buffett if you're casual about it—but you'll definitely be richer in the long run.