No Stockbroker Needed: How to Begin Investing On Your Own

Young determined businessman kneeling before invest sign

Did you know that 61% of adults find investing in the stock market “scary or intimidating?” 

It’s no wonder that few people invest and miss out.

As a newbie to the world of investing, you might have a few questions. Keep reading to learn more about how to begin investing and kick any fear you might have to the curb.

How to Begin Investing on Your Own

To make investing a bit less scary, understanding some basic terminology and having an idea of which route to take are two important keys. Before we dive into how to begin investing, let’s cover some basic terminology to avoid confusion.

Asset Allocation

This is the breakdown of how your overall investment portfolio works. Asset refers to the investment types. 

Mutual Funds

This is like a large bucket of money that a fund manager receives from investors to purchase different stocks and bonds.

Index funds

It’s like a mutual fund, but it’s not actively managed. They are mainly managed by a computer.

Exchange-Traded Funds (ETFs)

It’s almost identical to an index fund but with more options. Plus, it trades like a stock.

Stocks

These are shares of ownership in a company. You can either buy individual shares of the company or you can buy through a mutual fund.

Bonds

These are loans that are made to companies and governments that are part of a larger loan. The borrower agrees to pay the loan back on a specific date and make interest payments until the pay off date.

Expense Ratio

This is what a fund charges its investors for managing the fund. 

Workplace Retirement Accounts

These are accounts offered through an employer. They typically include the following:

  • 401K – This allows you to invest with pre-tax money.
  • 403B – This is very similar to 401K, but it’s only offered to employees of educational institutions and some non-profit organizations.
  • TSP – This option is given to federal employees to give a similar option as employees who have the option of a 401K.

Individual Retirement Accounts (IRAs)

These are accounts you can set up on your own without an employer. Since this isn’t done through an employer, these accounts are after-tax and are taxed differently.

Investing Game Plan

Now that you have a basic understanding of some of the investing terminology, here is a basic game plan to make investing less intimidating.

1. Create an Investment Plan

First, determine your desired asset allocation. Determining where your money goes is an important decision when investing.

2. Choose Where to Invest

Once you have figured out your asset allocation, it’s time to choose where to invest your money. If you’re employed, you can choose either one of the ones we mentioned above (401K 403B, or TSP).

There are also trading platforms where you can choose to invest your money, and investormint shares their knowledge on the best trading platforms available.

3. Monitor Your Money

The last step is to keep an eye on your investments. It’s not a wise idea to set it and forget it, because you might miss an important change. Checking on your investments once a month will allow you to always make sure everything looks right.

Ready to Invest on Your Own?

Investing doesn’t have to be scary or intimidating as long as you have some basic knowledge. Learning where and how to begin investing will set you up to feel like a pro in no time.

If you are considering day trading, make sure you check out our article with some tips for newbies.