How do I get started with investing?


How do I get started with investing?

You’ve decided to start investing—excellent! Here are a few things to keep in mind to make sure you feel informed and confident.


You overhear your co-workers talking about their great investment returns and decide it’s time to invest some of your own money.

How do you get started? Which investments do you choose? 

Investing isn’t about betting on a whim; it’s about pursuing your financial goals—and so, what you invest in should be specific to your personal needs. It is a complex activity, and the sheer amount of information, choices, and risk can be daunting. But by taking one small step and then another, you’ll build the confidence you need to succeed. Let’s look at how to begin. 

How much money do I need to get started?

The short answer is, very little.

To invest in the stock market, you need an account with a brokerage firm. That account allows you to buy and sell different types of securities like stocks, bonds, and mutual funds. There are dozens of brokers in the United States. Each has its own pros and cons, including fees and amount of support or personalized advice that is available. Take the time to research which brokerage firm is right for you.

The minimum amount needed to open a brokerage account also varies greatly across providers.  Some brokerage firms do not require any money to open an account, others allow you to open an account for as little as $1. Once you’re ready to make your first purchase, you’ll need to fund your account with the necessary amount to pay for that purchase in full.

It is a good idea to start early and small while you gain investment experience. As you gain confidence as an investor, make sure you also calculate how much to allocate to investing and what returns you expect in order to meet your financial goals, while also recognizing the downside risk. The good news is that since its inception, the annualized return for the S&P 500—an index that represents the state of the stock market as a whole—is 10%.

How do I open a brokerage account?

Opening an account is relatively simple, as long as you have the appropriate documents and meet the criteria.

For most brokerages, you must be age 18 or older, have a valid Social Security number and legal US residential address, and either be a US citizen, US permanent resident, or have a valid US visa.

When signing up, you’ll need to make decisions like the type of account (cash or margin), what happens to uninvested cash, how you’ll fund your brokerage account, and your investment objectives. After that, you’re ready to choose which assets and asset classes to invest in.

What are asset classes?

An asset class is a grouping of comparable financial securities. 

Historically, the three main asset classes have been equities (stocks), fixed income (bonds), and cash equivalent or money market instruments. These days, investment professionals may include commodities, real estate, financial derivatives, and even cryptocurrencies to an asset class mix. 

If you’re not sure what asset class is right for you, that’s ok. Inquire with your financial advisor. Financial advisors can help you focus on what investments across asset classes to select to help you diversify your portfolio. Different asset classes have different return characteristics and different degrees of risk. 

By investing in several different asset classes, you’ll ensure diversity in investment selections. Investing in asset classes with low or even negative correlation may help optimize your portfolio’s risk-adjusted return and reduce volatility. In other words, when stocks go down, it doesn’t necessarily mean that bonds (or real estate) are going down, too. That diversification reduces your portfolio’s overall risk and increases your probability of making a return. Investment funds like mutual funds, Exchange Traded Funds (ETFs), and Real Estate Investment Trusts (REITs) allow you to access additional diversification by grouping your money alongside other investors to reduce the investment risk of a single asset.

Take small steps

Investing is a long journey, but the destination can often be worth it.

By aligning your goals to your investment return needs and appetite for risk, and by taking one small step and then another, you’ll gain confidence in your approach.

Good luck. You’ve got this.


This piece is intended as an educational piece only and is not intended to make any recommendations with respect to the purchase or investment in any product or investment.


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