Get ready to start growing your wealth.
- Investing can turn the money you aren’t using into a larger sum.
- Make smart investments by choosing the right brokerage, considering the risk factors, learning how to analyze stocks, and diversifying your portfolio.
Your primary financial goal, no matter your age or income level, should be to build yourself a solid emergency fund – one with enough money to cover three to six months of essential living expenses. Otherwise, you might be forced into debt if you were to lose your job or encounter a surprise expense, like a string of medical bills, home repairs, or issues with your car.
But once you’re all set with emergency savings, it pays to put the money you don’t need right away to work by investing. In a recent survey by Marcus by Goldman Sachs, 24% of respondents are aiming to start investing in the new year. If you’d like to follow in their footsteps, here’s how to get started.
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1. Find the right brokerage account
When it comes to opening a brokerage account, you have choices. Some brokerages are more flexible than others when it comes to things like minimum balance requirements and fees. Take some time to compare your choices and figure out which account is best for you.
Keep in mind that these days, there’s really no need to pay a fee every time you make a regular stock trade – so try to avoid brokerages that impose one. Also, not every brokerage account allows you to buy cryptocurrency. If that’s something you’re interested in, you may want to make that a criteria in your search.
2. Assess your risk tolerance
There’s no such thing as a completely risk-free investment. But some options carry more risk than others. Cryptocurrency, for example, tends to be riskier than stocks, while stocks can be far more volatile than bonds. Figure out where your risk tolerance lies so you can start building a portfolio, while keeping in mind that limiting your risk could result in lower returns.
3. Get educated
Buying stocks or digital currencies isn’t something you should do without educating yourself first. Not only should you take the time to read up on different cryptocurrencies, but you should also learn how to analyze a stock to see if it’s a good fit for your portfolio. Many brokerage accounts offer built-in resources that can help you embark on a successful investing career, so spend some time doing that legwork.
The Ascent’s picks for the best online stock brokers
Find the best stock broker for you among these top picks. Whether you’re looking for a special sign-up offer, outstanding customer support, $0 commissions, intuitive mobile apps, or more, you’ll find a stock broker to fit your trading needs.
4. Aim to diversify
A diverse investment portfolio can help you build wealth and also help minimize the losses you might take in the event of a downturn. If you’re new to investing, you may not have much money to sink into buying stocks or cryptocurrency. But there are steps you can take to stretch the funds you do have available.
One option is to buy exchange-traded funds, which let you own a bunch of different companies with a single investment. Another option is to buy fractional shares, where you own a piece of a share of stock rather than a full share.
Investing your money is a great way to grow wealth and meet your long-term financial goals. If you’ve yet to dabble in investing, the start of a new year is a great time to begin. Try starting out slowly and working your way up.
Using the wrong broker could cost you serious money
Over the long term, there’s been no better way to grow your wealth than investing in the stock market. But using the wrong broker could make a big dent in your investing returns. Our experts have ranked and reviewed the top online stock brokers – simply click here to see the results and learn how to take advantage of the free trades and cash bonuses that our top-rated brokers are offering.