A couple friends have started investing in stocks recently. When the Stock Market is down is actually a good time to buy in, but you have to be careful. Here are some important questions to consider before jumping in:
Where do I start?
First, you need a good handle on math and to learn the jargon. Here are some suggested online sources for beginners to understand the terminology:
If you prefer a course, here’s “Investing in Stocks the Complete Course!” at Udemy (on sale at the moment for $13.99).
How do I buy?
Robinhood offers commission-free investing. You get a free stock & so do I for the referral. In order to claim your stock, sign up and join Robinhood using my link. http://join.robinhood.com/meagenh
What should I expect?
I started purchasing stocks directly in April 2017 and my portfolio has grown 35% (unrealized gain) since then. This is not normal!
In the past three months, my portfolio took a nosedive to -2.4% at its lowest. I actually decided to buy more at that point.
I got some good deals on stocks I was waiting to dip in price. I keep an ongoing list of my next purchases. My biggest payoffs have been in solar energy production and companies that have mastered online retail.
My best advice is to look for companies and industries you really believe in. I try to support Ohio-based businesses, or organizations where friends & family work. Use your dollars to vote on the kind of economy you want to see thrive.
Read the Robinhood charts to see what a reasonable price looks like over the past 1-5 years, and set a limit order for that price.
When should I sell?
Recognize that money and price are just labels humans place on things they value, so the current value or price of something doesn’t matter… what matters is the difference in price between when you buy and when you sell. You can set a limit order to sell at a certain price so you don’t lose money.
Be prepared to lose it all and still not tank yourself. Start by investing an amount of money you wouldn’t mind just using on a vacation or something else “fun” so that you’re not dependent on getting it out at a certain time for income. This allows you to be patient enough for when the market or stock goes back up.
Make sure you have some financial and emotional stability. Even $100 in savings and a roommate who will buy you dinner on a bad day is enough to dive in, but don’t expect to get that money back too quickly, or possibly ever. Also keep in mind that you may have to pay taxes on any income, both dividends (quarterly payments) and sales.
Be prepared to lose it all and still not tank yourself.
How can I get rich?
Many people have invested their entire retirement or life savings in the Stock Market. Many professionals make their living guiding those investments. Individual investing as a hobby should not replace retirement accounts or professional financial services.
Also please remember that money is never the measure of a human’s true worth.
Mutually caring relationships make you rich.
Meaningful work makes you rich.
Memorable moments make you rich.
Contributing to a community in a positive way makes you rich.
Forgiving enemies makes you rich.
These are the kinds of things Jesus called “treasures in heaven,” where we need to invest the bulk of our energy and time.
So dabble and have fun out there, but don’t fret over the ups & downs. It’s a rollercoaster ride! Amateur investing is a brief jolt of entertainment, but not the true foundation or purpose of life.