Getting started in investing is not an easy task for most people. Many investment accounts have required minimum deposits. In addition, a lot of new investors are not sure where to invest their funds. They may be intimidated by the whole process of investing. Leaping into the market, even in a favorable environment still involves risk, and it’s hard to know where to begin.
The first step in getting started with investing is to open a brokerage account. This is the best strategy for new investors. The key is to choose a recognized, skillfully managed platform that offers a choice of low-fee, no-commission exchange traded funds. Traditional brokerage firms include Charles Schwab and Merrill Lynch. These companies offer personalized services. Discount brokerage firms, such as E-Trade and Ameritrade, are a low-cost alternative to traditional firms. Each of the discount firms offers low commissions and online platforms that are easy to use.
Exchange traded funds are good funds to start with as buying and selling exchange traded funds is usually cheaper. These funds can also be bought or sold at any time of the day; therefore they are fairly accessible to a beginning investor.
Here are a couple of things to consider in regards to investing:
High fees and commissions significantly reduce profits. Therefore, it is important to think about transaction and commission fees carefully. Online brokers usually charge a fixed, fee for each transaction. Exchange traded funds can cost as little as $2.95 per transaction or as much as $9.99 each. It makes sense to shop around. When trading exchange traded and mutual funds, it is important to also consider the expense ratio as this factors into profit.
Keep in consideration the possibility of inactivity fees, service fees, and other costs. It’s possible to find brokers that don’t charge these types of account fees; those brokers let you keep more of your money.
New investors should consider choosing a brokerage that offers the option of setting up easy automatic monthly withdrawals from a savings or checking account to your brokerage account. This is an easy, relatively painless way to start building up even more investment savings.
Knowing how to invest is very important. Beginning investors can learn a lot from the research and educational tools that are provided by brokers. Sites such as E-trade, TD Ameritrade, and Scottrade offer a number of online research and educational resources and tools to help you choose wise investments.