Investing in the stock market has never been easier than it is today. Because of the stock market platform where mom and dad investors can invest as little as $10 at a time. Compare this to investing through a stockbroker where the fees make it unviable unless you are able to invest a few thousand dollars at a time. The problem with this is that unless one has tens of thousands of dollars to invest, the question of diversification does not arise, where the money is put into different types of companies.
The solution is mutual funds, often called managed funds, where your money is pooled with other investors. The fund manager invests on your behalf. The advantage for the common man and woman is that a fund manager with experience in the financial markets is working on your behalf for minimal fees.
Your money is invested in a wide variety of companies and industries to reduce risk. money, and invest now
Sharesies is a popular trading platform in New Zealand, but it certainly isn’t the only one; Hatch, Kernel and Invest Now are others. In the US, Robinhood is a popular trading platform.
There are a lot of benefits of joining the stock market in this way, the main one being that it improves the financial literacy of the participants. Only reading books of economic nature is fine but knowledge comes from action otherwise what you have learned on paper is just information.
There are many strategies that you can use to put money into the market using online platforms.
I’ll tell you what I do. I focus on one particular company per year and invest money regularly in that same company, usually every two weeks. This way I will buy shares at a lower price when the shares are down. If an investor only bought shares in a company outright, it is likely that the share price was high which means it would have to go up further to maintain the value of the investment taking into account inflation and fees.
The stock I am buying this year is Spark, a New Zealand phone company. Last year it was Genesis Energy. I haven’t decided yet which company I will join next year.
If you are ready to invest more money then 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 invest in managed funds. Sharesies have several options for this with varying degrees of risk. The golden rule is higher the return higher the risk. An astute investor will keep this in mind while deciding whether to invest.
The basic rules of investing still need to be followed like not putting all your eggs in one basket and investing as per your goals. If you need money in the short term then investing in growth stocks which are giving high returns but with high risk is not a suitable investment as there are chances that the price of the stock will be down by the time you need the money.
Micro investing is a great way to get involved in the stock market. It helps you build your financial information, not to mention your wealth. This can be a part of your wealth creation strategy so what are you waiting for?