I had never considered the stock market as a place to make money for a common person like myself. I figured everyone investing had college degrees and inside information. However, after reading tons of articles on passive income, I decided that I would try my hand at dividend investing. That was in June of 2019. I have jumped into the stock market fully now and have about $30,000 invested. It has been a fun ride. Here are some things that I have learned along the way.
1) Jump in, NOW. You will probably never learn about stock investing while you are on the sidelines. With today’s apps allowing people to invest as little as $1, there is no reason to not get involved. Find an app (I personally recommend Cash APP and STASH) and put $5 into your favorite company. This is a start. Once you commit to it, it will be far easier to learn about investing.
2) Learn what kind of investor you are. Again, you will not learn until you start. There are tons of types of investors. Dividends, high growth, value, preferred, etc. It will take about a year to learn your core values and your parameters. Only you know WHY you are in the market.
3) Know your risk tolerance. Again, only you know your risk tolerance. If you don’t like losing money, invest in more conservative bond funds. If you only invest money you plan on losing, invest in the newest, shiniest companies. There are tons of ways to invest. You can even split the difference.
4) Create a balanced portfolio. One way to feel better about investing is to create a balanced portfolio. This applies to not only INSIDE your stock market accounts but also OUTSIDE your stock market accounts. Inside my accounts, I have different types of stocks from different sectors. I also have electronic traded funds and bonds funds. This helps mitigate potential losses in a downturn. I also have $5000 worth of bonds outside of the stock market (in TreasuryDirect.gov). I have $5000 in my real estate portfolio via Fundrise. I also have $2500 in a high yield saving account (I had more but had to buy a car in Japan). Finally, we have about $1000 in checking accounts. So if my stock market account was suddenly cut in half, we still have another $13000 outside of the market, if there was an emergency.
5) Open multiple accounts. It is fun to have multiple accounts. They all have their own personalities. You can try different methods in different accounts. I currently have 5 different brokerage accounts.
6) Having a balanced portfolio slows your gains, but it also slows your losses. Having a balanced portfolio will cost you some of the massive gains because all of your money is not in the stock market, however, the peace of mind of having money outside the stock market is invaluable. I watched as my Wells Fargo account completely crashed during the pandemic. Luckily, I had a high yield savings account and bonds on the sidelines, just in case. It felt good.
7) Learn for your family. Stock market investing is part of an overall strategy of becoming better at finances. This is ultra-important for personal growth. The important thing is that if you do not learn, your children will not learn. They will retain that same fear that you may have. My son already invests in NIKE stocks. About 25 years earlier than I ever did. This will mean a lot for his financial well-being and his financial independence.
I love investing in the stock market. If the market goes up or down, I take it with a grain of salt. I read a lot of articles on SeekingAlpha.com. Through this initial journey in the stock market, I have learned how to invest, started reading tons of books, started a blog, and learned about real estate investing. It all started with the words “PASSIVE INCOME”.
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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