If you are thinking of jumping into the stock market with some of the spare money you have sitting in the bank, you might want to consider some of the financial investments you should make if you want a higher chance of a successful return. The stock market can be a complicated marketplace, and it is important that you invest in some time and money to approach your new endeavor properly to minimize the risks.
Your Education
As a new investor, it is important to begin by educating yourself about the stock market. Not only are there countless books written about terminology, investment approaches and tips on how much to spend and where to spend it, but there are also other resources, such as seminars and market simulation apps and software, that will prove to be invaluable before you throw in your initial investment. While it doesn’t have to be formal education, it is worth your time and money to learn from experts in the field. Mistakes and successes are both important to learn from. According to Steven Dux, starting with $20,000 and splitting it half and half between education and your investment portfolio is a pretty reasonable way to start off.
Broker Charges and Fees
For most investors, stockbrokers are an indispensable part of the trade. A stockbroker is a professional or a company that buys and sells stocks and securities on behalf of their clients. Since membership is a requirement to be able to trade stocks on the major stock exchanges, such as the New York Stock Exchange or the NASDAQ, it is much easier and less expensive for beginners to begin trading stock through a broker. According to Stockbrokers.com, some of the top brokerage firms include Ameritrade, Charles Schwab, Fidelity Investment and Vanguard. Brokerages can charge a flat fee or a percentage of the transaction. Different brokerage firms have different fee schedules, so it is best to research all your options in your area before selecting your broker.
Financial Advisor
Lastly, if you are absolutely certain that you want to jump into the stock market, one of the best things you can do for yourself is to set an appointment with a financial advisor. According to Franklin Templeton, financial advisors have the expertise to help a beginning investor set up an investment plan, determine the maximum amount to invest initially and caution him or her about the fees to watch out for. If you find a reputable financial advisor, you can save time and headaches in the future if you find that you need recommendations for a reputable accountant or tax preparer.
Smart investments can greatly boost up your financial future. However, the stock market does have a substantial barrier to entry. It is highly recommended that you use part of your investment to ensure you have a good foundation before you jump in.
Here’s another article you might like: How to Use Investments to Boost Your Credit Score