How to Start Investing in Stocks

Your first question is probably: how do I make any money that way? Well, once you’ve purchased your stock (shares) of a company at a certain price, the value of those shares you hold will increase if people are willing to pay more money to acquire shares of the company than you paid. Likewise, if people aren’t willing to pay as much to acquire shares of the company than you paid, the value of the shares you own will go down, and you will in turn lose money.

Okay, but is the whole concept of making money through investing in stocks really that simple though?

Well, that explanation might be simplified, but it’s not inaccurate. That really is the crux of the process. Your ability to sell your shares of a company for more than what you paid for them is how you make money on the market. But that’s not even the best part about investing.

What I find most interesting, and I’d even go as far as to argue most powerful, about investing is the last thing I feel it’s important to cover before I get into exactly how to start investing in stocks. You see, when investing, you get to recognize those gains in value immediately, even without selling the stocks. The simple fact that you own stocks that have hopefully increased in value means you can reap some benefits of that asset immediately. Conversely, if the value of the shares were to go down (other investors are now willing to pay less than you did for shares of the company) your losses are only realized when you sell those shares.

I can’t overstate how powerful this is. If you purchased shares of a company at $100 and the same shares are now worth $150, you now own an asset worth $150. That can be leveraged in very real ways, affecting everything from your net worth to your ability to purchase a car or home.

If you purchased those same shares for $100 and they are now only worth, say, $80, you haven’t actually lost any money yet. Sure, if you were to sell those shares you would have lost the difference, in this case $20. But so long as you hold those shares, there’s always a chance the value can swing back into the positive. 

In stocks, you only ever realize the loss when you sell.

With that said, it’s finally time to answer the question we posed at the beginning of this article. How do you start investing in the stocks?

I’ll give you all the information you need to get started right here. The great news is it’s never been easier. You see, years ago, you needed to contact stockbrokers that managed all stock transactions. It was a very manual and very time-consuming process. You had no idea when exactly the order you called in (yes by phone) would go through, which meant you had no idea when you would actually own the shares, which meant if the price were to drop on a company midday due to some unforeseen negative headline, you wouldn’t even know if you owned the shares yet and could sell. 

On top of all that, the fee for each transaction made it cost-prohibitive to purchase single shares of most companies. Thankfully, these days are much easier and much faster. 

To start, choose a brokerage company (Fidelity, Charles Schwab, Vanguard, etc.). Do some research on which might be the best for option for you. Personally, I use Fidelity, and they have worked great for me for many years. I have no doubt they will work just fine for you too, but the choice is yours.

One recommendation: make sure you don’t choose a company that charges account fees.  Simply maintaining a brokerage account shouldn’t cost you a thing.

Once you’ve found your brokerage company, the next thing you need to do is open the actual brokerage account. As with most financial institutions, this can be done in a matter of minutes online. Now, you’re ready to transfer money over into your brand new brokerage account. The process is pretty straight forward. Really, it’s no different than transferring funds from one type of account to another, like moving money from a checking account to a savings account. In this case, you’ll transfer money from your checking/savings account to your brand new brokerage account.

There’s just one more step at this point. You have to actually buy shares.

A surprising number of investors have money sitting in their brokerage account as if it was a checking or savings account, and it’s doing absolutely nothing. Or worse, they diligently transfer money over into their brokerage account over months or even years, and the money just sits there dormant. No growth. No gains. No wealth generation. This is such a common mistake that I feel the need to specifically highlight this early investing pitfall.

But that won’t be you, because here at the Better Money Club, we’ll make sure you sidestep that common pitfall.

The last step is to actually use the money in your brokerage account to purchase shares (stocks) of a company. Depending on the brokerage company you choose, there may be options to automate purchases of certain shares (stocks) at set thresholds and other time saving or investment optimizing tools. Key thing to remember is money here in this account should never sit idle. Money in your brokerage account should either be working for you, or you should have a good reason for it to be just sitting there.

Better Money Club tip: particularly if you’re new to investing, consider purchasing shares of an index fund instead of shares of an individual company. Want to learn more about index funds, check out this article here: