Beginner Investor

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Question: I just turned 18 and want to invest in the stock market. How do I get started?


Bill
Park City, Utah


Dear Beginner Investor: That's terrific that you’re interested in learning how to invest in the stock market and commendable that you want to start stock market investing at this age. Buying and selling stocks is an excellent thing to learn, be able to do in your spare time and continue to do all the way into retirement. At this stage of the game, you will do so much for yourself by learning and understanding what investing is all about.

Learning about the stock market takes a bit of time. Books are a great way to start, and I recommend The How to Make Money in Stocks Complete Investing System: Your Ultimate Guide to Winning in Good Times and Bad by William J. O’Neil. The book’s premise is “teach a man to fish, you feed him for life.” It describes what kind of fundamentals to look for in a stock, a bit about how to look for patterns in stock charts and how to protect your capital. It’s one of the first books I read when I started my stock trading and a very good start for online investing for beginners.

Next, you’ll have to open an account with a stock trading brokerage. There are some easy-to-use brokerages that offer:

  • No minimum to open account
  • Purchases of fractions of shares
  • Low fee per trade

Two brokers that offer these investing services are BuyandHold.com and Sharebuilder.com. These brokers also offer educational resources and glossaries on their websites that are available to you for free to help broaden your knowledge.

A great thing to do is “paper trade” as you begin to learn how to find great stocks. That’s basically where you keep a fake portfolio of your trades pretending to trade in and out of stocks while you see how you do. This gives you the time to adjust and learn as you go. Yahoo Finance offers this free watch portfolio service as well as many brokerages.

Having shared some of the basics for beginning this endeavor, one of the most important things for beginner stock market investing is to understand the element of money/risk management. While you are learning, be careful about how much you trade in any one position and have stop loss order in with your broker so if the stock price goes down you don’t lose too much money. This site’s page on money management is a comprehensive way to keep control over your money.

In addition, "The Beginner Investor's Simplified Guide to How to Invest in Stocks” page on this site is an expanded overview of what stock trading entails so I encourage you to read it because it will help with the “big picture overview” of stock investing.

Getting started now will give you the time to learn and continually improve your stock investing or trading knowledge and experience.

The terrific thing is that you’re ready to begin. Best of luck!!

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