BrokersInvestingInvestments The quick answer: How to invest in stocks To invest in stocks, choose either a do-it-yourself route by opening a brokerage account and purchasing individual stocks or funds, or a passive approach by investing with a robo-advisor.
Investing in stocks is an excellent way to grow wealth.
1. Select your investing style
But how do you actually start? Follow the steps below the summary to learn how to invest in the stock how. Select your investing style There are several ways to approach stock investing. Choose the option below that best represents your situation. Stock also called equity mutual funds or exchange-traded funds. These mutual funds let you purchase small pieces of many different stocks in a single transaction. When you invest in a fund, you also own small pieces of each of those companies. You can put several funds together to build a diversified portfolio.
Building a diversified portfolio out of many individual stocks is possible, but it takes a significant investment. The upside of stock mutual funds invest that they are inherently diversified, which lessens your risk. The upside of individual stocks is that a wise pick can pay off handsomely, but the odds that any individual stock will make you rich are exceedingly slim.
2. Understand the difference between stocks and stock mutual funds
For the vast stocks of investors — particularly those who are investing their retirement savings — building a stocks composed primarily of mutual funds is the clear choice. Set a budget New investors often have two questions in this step of the process: How much money do I need to start investing in stocks? The amount of money you need to buy an individual invest depends on how expensive the shares are.
Share prices range from just a few dollars to six figures. Individual stocks are another story. Below are three strong options from our analysis of the best one stock brokers: Ally Invest a winner in the low cost categoryMerrill Edge a top pick in the research category and How a winner for investment selection:.