Investing in the stock market has never been easier than it is today thanks to stock trading platforms where mom and pop investors can invest as little as $10 at a time. Compare that to investing through a stock broker where the fees make this unprofitable unless you can invest a few thousand dollars at a time. The problem with this is that unless one has tens of thousands of dollars to invest, diversification where the money is invested in a variety of companies is out of the question.
The solution to this is mutual funds, often called managed funds, where your money is pooled with that of other investors. The fund manager invests on your behalf. The advantage of this for the common man and woman is that the fund manager who has experience in the financial markets is working on their behalf for a minimal fee.
Your money is invested in a variety of companies and industries to minimize risk. Wealth and invest now
Sharesies is a popular trading platform in New Zealand, but it’s certainly not the only one; Hatch, Kernel and Invest Now are others. In the US, Robin Hood is a popular trading platform.
There are so many benefits to getting involved in the stock market in this way, the main one being that it improves the financial literacy of the participants. It is all very well to just read books of a financial nature, but knowledge comes from action, otherwise what you may have learned on paper is just information.
There are various strategies that you can use to inject money into the markets using online platforms.
I’ll tell you what I do. I focus on one particular company per year and invest money in this same company on a regular basis, usually every two weeks. That way I will buy shares at the lowest price when the shares go down. If an investor simply bought shares in a company with a single lump sum, then there is a chance the share price was high, meaning it will have to go up even higher to maintain the value of the investment when factored in. inflation and rates.
The stock I’ve been buying this year is Spark, a New Zealand telephone company. Last year it was Genesis Energy. I have not yet decided which company I will go to next year.
If you are willing to invest more money, you can choose more than one company. As long as you invest regularly, you will take advantage of the low points in the market.
If you want, you can simply invest in managed funds. Sharesies have a range of options for this with varying degrees of risk. The rule of thumb is that the higher the return, the higher the risk. An astute investor will take this into account when deciding what to invest in.
The basic rules of investing still need to be adhered to, such as not putting all your eggs in one basket and investing according to your goals. If you need the money in the short term, then investing in growth stocks that are high yield but higher risk is not a suitable investment because the stock price is likely to drop at the time you need the money.
Micro investing is a great way to get involved in the stock market. It helps develop your financial knowledge, not to mention your wealth. It can be part of your wealth creation strategy, so what are you waiting for?