Easy steps for beginners to start investing the in market
This blog post is going to go over investing for beginners. We are going to simplify it, to break it down to a point where anybody can easily understand it.
Most likely you already want to invest but you are paralyze. You don’t know where to start or what to do. You hear some many different opinions , there is so much information that you are overwhelm.
Maybe you are afraid to lose money.
Maybe you had a default judgment , your bank account was frozen and they took your money and you are afraid to invest since they might take your money again
I can go on and on about fears and excuses of why not to invest. but instead I say this
- The probability to win the lottery , If you don’t play the lottery is Zero.
- The probability of you making money on the stock market if you don’t play the game is zero.
Hence, in order for you to win the game , you need to play the game. You can start investing with just $5.
What $5 is going to do? not much but we tend to become proficient at what we repeatedly do.
Little by little you become less afraid, since we tend to do what’s familiar to us. By just starting with very little money, you start becoming familiar with the process. You start investing $5 dollars here, $5 dollars there, next thing you know, you are not longer afraid and you have learned a new skill.
Therefore, we’re are going to give you some actionable steps that you can take today so you start and adjust as you go. So you can start getting a return of your money right away.
Document, Shared and Monetized
The first step is to Document what you have learned, share what you have learned and monetize what you have learned.
Document
As soon as you learn something, you document what you have learned.
why?
- because you can always go back and review what you have learned.
- You help other people that are in the same position that you were before.
- You can make money while learning.
You can document your progress with a blog, with a podcast, with a video.
Yes, you can be anonymous if you want.
No, the platform that you use does not have to be pretty. for example you can start a simple blog for yourself. Nothing fancy, the same way that you would document something on a book, or on notepad or on Microsoft word, you just document it on a blog.
that way, if someone find your blog, you can help someone else that is in the same position that you were.
Share what you have learned
As soon lean something, you shared it with the world. You make it a habit of it. It would feel good to know that you help someone.
If you putting what you learn in a blog eventually people will find you blog. If you are reading this blog post right now, you are proof of that. Even if all you do is type on your blog what you have learned without doing any SEO, without any backlink. No marking at all.
Monetized what you have learned
You can make money by monetizing what you learn too.
Take investing for example. If you are going to invest in the stock market. You need to use some type of platform.
Just put a link stating what platform you are using. If you go to the website of the platform that you using and scroll all the way down. There is something call affiliate program or affiliate partner.
Sign up and you can start promoting the platform that you are using for investing. if someone sign up through your affiliate link, you get a commission at no extra cost to the customer.
Walmart, Amazon and google example
A better example that would probably make more sense is Walmart or amazon or google.
You most likely use the service of one them and you don’t even know it.
You probably buy food and things a Walmart or amazon. Why not buy a share of stock of Walmart, if you buy stuff at Walmart even without any research you already know that it has a lot of customer. You are proof of that.
How about buy a piece of share of the company that rent the land to Walmart or amazon where they keep their warehouse to store items. It’s call REITs in the stock market.
Hence.
With the stock market, you can own a piece of amazon, you can own a piece of the rental land where amazon operate.
Buy stocks you know
Just look at yourself. What items or things are you using on a continue basics.
Example:
You probably has internet. Find out which company is proving your internet. Buy a piece of share of it. You already know they are making money out of you since you are a customer. why not own a piece of that company and make money out of them.
You can do this with any items.
Just start really small $5, eventually you learn to create a portfolio. The most important thing is just start and adjust as you go.
What’s the worse that could happens, you lose couple of bucks and some time. But I tell you, once you start investing, you’ll never go back.
Just imagine you can walking on the street, you can tell yourself, you own that building, you own the company that make those cars, They work extremely hard for me.
When you start investing you start to see the world from a different perspective.
Is like you own a piece of the world.
Sometime a new product comes out and it becomes very popular. An investor way of thinking is can buy a piece of the company that make this product.
It does not matter who is on top
It does not matter who is competing against who or who is on top. You can own the best two companies or the best 5 top companies on a specific field. Just buy share of them. It does not matter who is wining, you still making money out of them.
ETF
ETF (exchange traded fund) are great for beginners. If you don’t know what ETF are, we’re are going to go into details with them.
But basically what a ETF does it eliminate some of the risk that you take as an investor.
Instead of buying an individual share of the stock of amazon, you can buy a ETF that has amazon on it.
An ETF is collection of group of companies. So, when you invest in an EFT you are investing on many companies at once. This lower your risk since you diversifying.
An ETF is like a Mutual funds but without all the fees, without all the expenses.
Sectors
There are a total of 11 sectors In the stock market
- Tech (IT) – Information Technology
- Financials
- Health care
- Industrials
- Communication services – Telecommunication services
- Consumer discretionary
- Consumer staples
- Utilities
- Energy
- Materials
- Real Estate (REITs)
- Crypto-Currency is not sector, but in the future it would probably becomes the 12 sector.
The stock market has 11 sectors in total, Every stock has to fall into one of those sectors. Crypto- currency does not has sector but for now let’s assume that it’s the 12 sector.
Inside of the sectors there is something call industries.
Industries
So we have 11 sectors and inside of these sectors there are things call industries. therefore, every sector has one or more industries.
An industry is one or more companies that are related base on their primary business activities.
This is a break down of how many sectors and industries are there.
Sectors(11) >Industry groups(24) > Industries (69) and sub-industries(158)
Create a Portfolio
You can create a portfolio with just one company for each sector or you buy an eft that has each sector.
You can invest $5 dollars on an ETF,
How you can you invest $5 on an EFT that has many companies? it’s call Fractional share
What’s great about ETF is that you don’t need to do any research if you are not ready yet, You might like a type of industry, just pick a EFT that cover many companies on that industry.
Just remember that there are 11 sectors, you can buy an eft for each sector. If you buy crypto which is like the 12 sector. Then is like you have invested in the entire stock market, the entire world. This is an over simplification of course but it is so you can have a mental picture.
Let’s go over a metaphor example
Imagine you go into store and you want to buy a drink , so you go to the refrigerator , the refrigerator is like a sector., the refrigerator has many type of drinks , it has apple juice, orange juice, fruit punch, almond juice, etc. it has many juices. The industries are all the type of juices.
Now if you want to invest into a drink. you can invest individually into one type of drink the industry
or you can invest in the refrigerator that hold all type of juices, the sector.
The ETF basically allow you to invest into the entire sector. so by buying the refrigerator with all the juices , you are buying an eft. I hope this make sense.
ETF are very passive, you just invest on the eft of your choice and the management fee are really low, compare to mutual funds.
Mutual funds are like eft but someone else manager the fund actively
ETF are manager passively.
Whether you are looking to invest into a EFT or mutual fund
You need to look at a few things such as the expense ratio
Expense ratio
The expense ratio of an eft or mutual fund is how much money in fee you are paying to them to manage the eft or mutual funds. The lower the expense ratio is , the lower the cost you pay.
What’s great about EFT is that you are paying someone to manage your money. They do all the work for you for a very small fee, like 0.04%. or 0.08%
Dividend Yield
The dividend yield is how much money they company is paying you per share. Monthly, quarterly, or yearly. This is consider cashflow, you can reinvest the dividend or take it out.
Return
The return, the the return on your money, If you put $100 dollars, and your turn is 10%, then you earn $10
ETF Holding
The elf holding is what companies are in the eft.
Final thoughts
You pick any platform, start with eft, start small, with a few bucks. and adjust as you go.
