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Disclaimer: I am not a certified financial professional.  All articles and posts are opinions expressed by me, a contributor to the Common Cents Finance platform.  The information provided is not a research report or financial advice.  It should not be used as the basis to buy or sell a security, nor is it an offer to buy or sell a security.  This article generates revenue through affiliate commission at no cost to you.

Investing in stocks is a very simple process, yet many do not start. Only 32% of people under 29 own stocks. This means that seven out of ten young people are not taking advantage of a financial opportunity right in front of them.

Surprisingly, the numbers do not get much better for older age groups. Only 59% of people between 30 and 40 and 66% of those between 50 and 64 hold stocks. While this is undoubtedly an improvement, these figures are far smaller than they should be. This is especially the case when you consider how close to retirement these individuals are. Some are even only one year away from the typical retirement age of 65.

Investing in stocks can provide you with a means of financial security for your retirement and even pre-retirement if done aggressively. However, not everyone is starting their journey on the stock market, and it is a tremendous missed opportunity. But, why is this the case?

Why Aren’t More People Investing

This is a very good question. The best answer is that many people are just never taught basic level personal finance. Roughly 67% of adults around the world are financially illiterate, meaning they have no grasp of basic financial subjects. As a result, they are more likely not only to avoid investing but make poorer financial decisions overall.

This really should not be, as personal finance is rather simple. Financial education is rather straightforward; you just have to be taught. Instead of pursuing financial freedom through investing, many are overwhelmed at the thought of it and choose never to start.

As you keep reading, you will see for yourself how easy investing really can be. It requires very little work, and you do not need to be some academic scholar or some master at business. All you need is a basic grasp of the stock market, which is not as difficult as you would imagine. To learn more specifics about the stock market, you can read A Beginner’s Guide to Investing here. Otherwise, this article is going to go into depth on how you can start to invest and the best approaches to take.

Where Do I Invest?

Before you actually invest, you need to select a brokerage. A brokerage is a platform that actually allows you to buy and sell stocks and other securities. There are a number of brokerages out there that you probably already know. Each has its own pros and cons, but overall, the differences are negligible. You just need to be mindful of one thing: fees.

Many brokerages do not charge their users any fees anymore thankfully. But, there are still some that do. What fees would these brokerages charge? Well, they would charge a commission on every trade you make. For example, if you want to buy 100 shares of Coca-Cola, you might have to pay a fee in addition to the price of the shares. The same would be true when you sell stock.

For the brokerages that still charge them, these fees can be rather costly, around $7 per trade. So, avoid these brokerages at all costs. You would be spending money on unnecessary expenses.

Brokerages to Consider

The most popular brokerage with younger investors is undoubtedly Robinhood. To learn more about the pros and cons of Robinhood, you can click here to read my review of the platform.

If you want a cliff notes version, here is a brief overview. Robinhood is the pioneer of commission-free trading. The platform forced the entire industry to adopt their business model due to its success. In addition to no fees, Robinhood also offers fractional shares, which allow investors to buy shares for as little as $1. For example, if I want to buy Apple and the price is $200, I could buy $1 worth of stock, which is equivalent to 1/200 of a share. While this may not seem super appealing to you, this definitely would allow you to maximize your money in ways other brokerages do not allow.

Also, if you choose Robinhood, you will receive one free stock when you create an account. So, if you are interested in free trading, fractional shares, and a free stock, you can click here to open an account with Robinhood.

There are other platforms out there that are very similar to Robinhood. WeBull is another example of an online brokerage that charges no fees. They also offer two free stocks when you sign up and deposit $100. You also could open an IRA with this platform, which is good for retirement planning. If you are interested in collecting those two free stocks with WeBull, click here to sign up.

Betterment is another online brokerage you could use. This platform is unique for is high-interest savings account, which could be good for an emergency fund. Betterment does not charge commission, but it does have a yearly fee of 0.25% for its users. Although it does have a fee, it could be argued that it rather small given the interest you receive from the savings account. If you are interested in creating an account with Betterment, click here.

If you do not want to use any of these online brokerages, there are other many options available.  Brokerages, such as Fidelity and Charles Schwab, are more traditional platforms.  They are both very reputable and have very good track records. So, feel free to do your own exploring to see with which brokerage you’re most comfortable.

Where Do I Get Money to Invest?

You definitely need to have money to make money. There is no way to get around that. This deters many people from beginning, because they think they do not have enough money to start investing.

However, the amount of money you actually need to start is much less than you would imagine. There is no such thing as not having enough to invest. With online brokerages, you can start investing with as little $1 with fractional shares, like I previously mentioned. With this, you can start constructing a solid diversified portfolio with $10.

The Power of Compound Interest

Also, with the power of compound interest, investing small amounts now can become tremendous amounts of wealth in the future. For example, if you were to invest $5 per month over the course of 40 years, your total portfolio would be worth over $29,000. The crazy aspect of this is that you only contribute $2,400 of that $29,000. In other words you contributed 8% of your entire portfolio’s worth.

This is only if you invest $5 per month. Imagine if it were $10, $15, or $20 per month. For example, if you were to contribute $500 per year over the span of forty years, your portfolio would be worth almost $140,000. This is also with a lower yearly return of 8%, instead of 10%.

Of the $140,000, you only would have contributed 14%, meaning almost 90% of your portfolio’s worth is a result of compound interest. Just to emphasize this, you would have made $120,000 while only contributing $20,000 of your own money. That is truly remarkable.

This just demonstrates that you do not need a significant amount of money to start investing. All you really need to worry about is starting in the first place.

With compound interest, the earlier you start investing, the more you benefit. So, you should look to start investing as soon as possible!

What If I Want More Money to Invest?

If you do want to increase your income to invest even more, there are some paths you can take. You can focus on getting a job. If you are a younger investor still in college, honestly any job would do. With your paychecks, you can commit a portion of it (no matter how small) towards your investments.

You can be very creative in generating money. To learn more about making money creatively, click here to read my article on How I Made $1,000 Cleaning My Room.

What Stocks Do I Pick?

At this point, you picked a brokerage and now have some money to put towards your investments. Now, you need to know what stocks to buy. This depends largely on your personal preference. However, I would highly recommend looking into index funds.

Regularly, index funds beat the market and actively managed accounts. Also, they are rather safe investments and very diversified. And, the best part is that index funds really require no research at all, because you are investing into the entire market essentially. This is probably the best option for many individuals for that reason. It is a very passive investment, so many people really do not need to know much about financial markets.

In addition to index funds, you could consider holding a few positions in large-cap, reputable companies. These stocks would also be relatively safe investments with possibly more upside potential. You could also look to construct a dividend portfolio, in addition to your index funds.

As long as the financials of the company are sound, they company’s stock should treat you well if you hold for the long-term. But, that is only the case if you have a long-term mindset when investing.

Be Patient

Those who attempt to time the market or day trade are in for a rude awakening. Less than 1% of individuals who day trade actually see a positive return on their investment. This means that over 99% of day traders lose money.

Being too greedy and trying to see returns too early can be a very costly mistake for new investors. So, it is probably in your best interest to look for the long-term growth of stocks, instead of trying your luck in the short-term. This mindset also prevents you from making numerous other mistakes made by inexperienced investors.

You need to be patient and not solely speculate (or gamble) on the stock market. Having patience would allow you to realize more gains and make you much more comfortable with your investments.

Time to Invest in the Stock Market!

Now, you are ready to invest! There may be some nerves when you first start, but there is nothing to worry about. Index funds offer safe investment options, and if you invest in individual stocks, large, reputable companies with good track records should also be relatively safe investments.

Again, always look to the long-term. Do not be worried about short-term trends or dips. If you truly love the company’s business model, then you should believe that it will perform well over the long-term, which it will.

Good luck, and happy investing!

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Post Author: Anthony Crincoli

Anthony is the Founder and Lead Content Creator for Common Cents Finance. Away from the platform, Anthony is a CPA Candidate and an auditor for a Big Four public accounting firm. He has a passion for personal finance and looks to promote financial literacy whenever and however he can.

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