Given how unpredictable the market can be, you might feel tempted to keep all your money in a savings account. Millennials, in particular, tend to shy away from stock market investments more than other generations. But by being too cautious or avoiding investing, you’re missing out on the benefits of compound growth and letting your financial worries stop you from potential gains.
Investing in stocks can be scary if you don’t approach it correctly. It’s important to keep emotions out of it and think long-term. This way, your investments have time to grow and bounce back from any market upsets.
Whether you’re cautious or just looking for some investment advice, here’s how you can invest in stocks without the stress:
**Learn the Basics**
If you’re new to investing, take some time to learn the fundamentals before jumping in. Think of Warren Buffett, who never invests in anything he doesn’t fully understand. Make sure you know what stocks, bonds, ETFs, index funds, asset allocation, and management expense ratios (MERs) are. Read books, join a local investment group, or check out online forums like Bogleheads or Reddit for detailed investment strategies and advice.
**Minimize Risks and Expenses**
Experts often suggest reducing investment costs to maximize returns. High MERs and administrative fees can eat into your 401k profits. Index funds and exchange-traded funds (ETFs) often have lower fees and help you avoid putting all your money into one company’s stock. They let you spread the risk across multiple companies.
**Just Do It**
Daily stock predictions can lead to emotional decisions and poor returns. Instead of trying to time the market, it’s better to invest and stay invested. Most financial experts recommend diversifying your portfolio, considering your risk tolerance, and how far you are from retirement. You could make a habit of investing a fixed amount from each paycheck or monthly business profits.
**Be Prepared to Buy Stocks**
Once you have a balanced savings and a financial plan, decide on a small percentage to invest directly in stocks. Be prepared for some losses and look at it as a fun activity that doesn’t harm your overall goals. You can consult a financial advisor to figure out how much you can afford to risk on stocks.
**Choose the Right Investment Partner**
Since cost is important, pick a company that offers the funds you want with minimal fees. Vanguard and Fidelity provide a range of ETFs, index, and mutual funds with low MERs. For your “play money,” consider a brokerage like E*Trade or Scottrade, which offer easy access to individual stocks at a reasonable trading price. Ally Invest is another option; they don’t have an account minimum, and each trade costs just $4.95.