Think the stock market is just for bigwigs? Guess again. Truth is, with stock prices at a major low, this is a great time for market newbies to get in on the action.
Step 1: Analyze Your Accounts
Do you have money to invest
? The cash you put into the stock market should be money you can afford to lose. Look at your budget
and see how much is left over after housing, transportation, emergency fund padding, and your retirement savings
-- stocks shouldn’t replace your 401(k) or IRA.
Decide what chunk of that balance you can afford to put into the market, whether it’s $100 or $2,000.
Step 2: Buy What You Know
One of the first questions new investors
often ask is: “How do I know what to buy?” Well, you can make money buying the brands you know best. Think of it this way: If you’re really into cycling, you know way more than the average person about which bikes are hot right now or the new products that are coming out. Use the knowledge you already have to make smart investments.
Step 3: Check out Big Brands
If you want to start with a safe, steady stock, major brands like Walmart, McDonald’s, and Disney (just to name a few) are solid options. With the economy in the tank, you can now buy shares for as much as 40 percent lower than they’ve gone for in the past, making it easier than ever to invest without breaking the bank. The trick is to buy low now and sell high later. Also check out Morningstar.com
to see the top-rated funds.
Step 4: Test Your Skills
Before dishing dollars into the market, go to Investopedia.com
for tips and advice in a language that’s easy to understand. Another great resource is WeSeed.com
, which allows you to create a portfolio using fake money. You can “buy” stocks in your area of expertise, see how your investments would do in the real market, and get comfortable with how stocks work before investing with real dough.
Step 5: Talk to People
Ask friends, family, and coworkers to weigh in on companies and products you’re thinking of investing in, and feel free to dish on the brands you know best. You can also check out Facebook, investment clubs, and our Money Matters message board
Nestperts Jennifer Openshaw, author of The Millionaire Zone: Seven Winning Steps to a Seven-Figure Fortune and cofounder of WeSeed.com; Katie Dunsworth, coauthor of The Smart Cookies’ Guide to Making More Dough
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