As much as you would like to invest or even know how to invest, starting is always the most challenging part. Especially when it comes to the stock market. There are many different ways that you can invest in the stock market, and each avenue has its own pros and cons.
Regardless of your level of knowledge about the stock market, there is an investment option that will work for you. Whether you want to invest in one stock or multiple or if you are deciding between investing yourself or trusting someone else to do it, there are answers out there for you.
Knowing which options fit your needs is what will help you mitigate those risks quite easily. And while doing that doesn’t assure you success, they can be helpful. Here are some of the ideas on how you can invest in the stock market.
1. Buying Online
The cheapest way you can start to build your investment portfolio is through buying stocks online. Here, you’re only charged a flat fee for each transaction you make. With that being the pro of this route, the con is you have to self-educate here.
See, buying your stock online, you’re unlikely to get much information and guidance. That means you may have to go through a lot of trial and error before you can get it right. There is a lot of background research on your part that is required for this option to be successful.
2. Full-Service Stockbrokers
While it may not be everyone’s cup of tea, full-service stockbrokers are still a good option for investing in the stock market. They come with a lot of recommendations and expertise that would have otherwise taken you months or years to figure out on your own.
Their guidance also helps protect you from fear and, at times, greed. Brokers, unlike buying stocks online, are probably one of the most expensive ways you can invest. Also, you need to use the SEC’s manual to find the right and trustworthy broker. After all, you are entrusting them with your financial future.
3. Financial Advisors
Are you willing to part with around 1-2% of your total portfolio? If you don’t mind such fees, then a financial advisor should fit right into your investment plan. Unlike a stockbroker, who only brings recommendations, a financial advisor selects the stock and also buys them for you. Hence the hefty fees they charge.
If you get the right person to handle your finances, you won’t have to take on regular meetings, which will save you time. You can see your advisor, at most, twice a year.
4. Hedge Funds
If you believe in high risk, high reward endeavors, then investing in hedge funds is the way to go. Before diving deep, understand that hedge funds are privately owned companies. The SEC doesn’t regulate them and, with such comes risk. Hedge funds majorly invest in highly-leveraged investments. These investments promise to outperform most investments that pool all investor funds into one actively managed account.
While the stock market can’t be considered rocket science, it takes the right amount of preparation and research to get into it. It doesn’t matter if you’ll select a financial advisor or a full-service stockbroker; you at least need to have an idea of what you’re getting into. These are just some of the ways you can start your stock investment journey with. Each one of them carrying its fair share of pros and cons.