Investing is a great way to make passive income and help your money hold its value over time. With the ever-growing popularity of the stock market, more and more people are asking themselves how to get involved or if they are eligible to do so. With how vast of a topic the stock market is, it may seem daunting to start investing. Still, it is important to understand how to research stocks and make sound financial decisions even before starting to invest as well as having a game plan when you do start. Through enough research, anyone can be well-equipped in understanding the fundamentals of the stock market and can easily make smart investments that turn a profit.
How to Start Investing
Of course, the first thing you have to do when attempting to invest in the stock market is set up a way to be able to interact and buy stocks in the market. This is typically done by a broker, previously used to be known as a stockbroker who was a physical person you would have to call and tell which stocks you want to buy and they would sort it out for you, but now with the internet brokers can be accessed just by connecting online. There are many different brokers (such as eToro, Fidelity, or TD Ameritrade just to name a few) which makes it important to do extensive research into seeing which ones best fit your needs and investing plans and after you pick the broker that best fits all you have to do is make an account and get complete access to all of the stocks on the US stock exchange.
How to Invest When Under 18
One of the largest restrictions that may keep someone away from investing is that the minimum age requirement is 18 years old. Although you won’t be able to make your brokerage account if you are under 18 years old, you can become a beneficiary if a parent or guardian makes you a custodial account. Custodial accounts are accounts for minors so that they can start investing in stocks they are interested in while the custodian, typically a parent or guardian, has control of the stock picks and makes them for the beneficiary. Once the beneficiary turns 18 and is no longer a minor, ownership of the account is transferred to them where they can make their stock picks by themselves.
Things to Keep in Mind When Investing
When first starting to trade people may get a little excited by the possibility of making thousands of dollars in a day but it is important to be responsible with which stocks you choose because at the end of the day, if the stock you bought plummets in price you're losing your money. Another thing to remember for people starting to invest is that previous prices are not a good indicator of where the stock will go in the future. Although it may seem tempting to buy a stock simply because it has been going up steadily over the past month, anything can happen and maybe next month the stock loses a lot of its value. And lastly, the most important piece of information about investing is to make sure you always research your stocks beforehand and use as many credible sources as you can to verify what the truth is.
To start investing all you need is a brokerage account with a broker that you trust and fits your needs. Although minors under the age of 18 are not able to make their brokerage account they can still invest under a custodial account set up by their parent or guardian. These custodial accounts help give the minor the experience of investing while also having any of their stock choices go through the parent or guardian first. And to invest effectively it is important not to rely on past prices and to always do your research about any stocks you may be interested in.
