This post may contain affiliate links, which means I'll receive a small commission if you make a purchase. Originally posted on millennialtwist.com.
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Yep, you can get started investing FOR FREE, even if you only have a little to invest. You can pick and choose which stocks or funds you want, or choose from M1's recommended funds. You can also buy partial stocks and funds, all without paying any subscription or trading fees! Get started now with a $10 credit!
Scared to invest in the stock market, or think it's too hard?
Well, you're in the right place! Just keep reading to hear how I overcame my fears and preconceived notions about the stock market, and let's get you investing today!
*QUICK DISCLAIMER: Just wanted to make it clear that I'm not a financial advisor so nothing I say in this post should be taken as financial or investing advice. This is just my personal experience!
One of my biggest regrets is that I didn't start investing in the stock market sooner. And I particularly regret not starting my retirement account sooner…
So why did I wait 'til my age started with a 3 to give it a try?
Well, money was always tight to begin with. But at the end of the day, I was just ignorant and afraid, and had never been given a reason to give it a second thought.
If you can relate, my hope is that this post will encourage YOU to give stock market investing a second thought!
Why Do We Fear the Stock Market?
I don't know about you, but as a single young female, I had all kinds of stereotypical preconceptions about the stock market that kept me from giving it a second thought for far too long:
- The stock market is for people who are already rich and have money to burn
- The stock market is far too risky — why would I gamble my hard-earned dollars when I can barely pay my bills?
- The stock market is too difficult to understand
- The stock market sounds incredibly boring
- The stock market is for guys… wait, what?!
It makes me cringe to realize that's what I believed for most of my life, but for whatever reason, I'm sure I subliminally brushed stock market investing off as a “man's game.” I just wasn't built for it. Nevermind my affinity for math and entrepreneurial spirit… surely I could never wrap my head around it.
But when you think about it, MOST women don't invest in the stock market. I don't personally know of any in real life — do you??
My mom certainly never had any interest in the stock market, and the thought still terrifies her. She's always stashed her extra money in savings accounts, CD's, and other far-less “risky” options, while my dad has poured as much as he could into his IRA.
I'm not exactly sure WHY women seem to be far less likely to even ATTEMPT to learn about investing in the stock market, but I'm here to say it's gotta stop!
Age + Generation?
According to CNBC, 77% of millennials are skeptical of the stock market. As someone who graduated college in 2008, I can understand many millennials' tendencies to hold on to their cash with a tight fist.
Still, with access to fee-free investing on our phones, it's kind of strange that older generations were more likely to invest than to hide money under the mattress. And considering how much less likely it is that a millennial will retire with a pension and/or 401k from their job, it's even more crucial for us to be educated and empowered to plan for our own retirement!
It's Really Not As Scary (or Difficult) As You Might Believe
You don't have to be afraid of the stock market, and it's not nearly as out of your reach as you might subliminally believe!
Seriously, if I can do it, you can too! And it doesn't have to be very risky at all! Now that I understand it enough to have a solid gameplan, I don't even put much time or effort into it at all anymore, and yet I get to see my account(s) steadily grow.
Learning the basics of stock market investing was the first step to easing my crushing anxiety about the future, because it empowered me with more clarity and HOPE as I've seen my hard-earned dollars actually make me money!Learning the basics of stock market investing was the first step to easing my crushing anxiety about the future.
And I'm happy to share all of my favorite FREE tips and resources that helped me get started!
How My Eyes Were Opened to the Possibilities of Stock Market Investing
By my late twenties, I honestly wasn't thinking about the stock market at all, other than the $3000 I thought had been invested into an IRA by my expensive account manager, but wasn't … it took me a whole year to even notice that my money was essentially sitting in the account doing nothing, because I had paid someone to handle it for me who saw my account as peanuts. If ever I wasted money on the stock market, it was to pay that guy, PLUS the trading fees associated with that account. #notbitteratall
To say the least, that experience left me feeling super frustrated with both the stock market and my own ignorance, because my ignorance of the stock market caused me to rely on someone who didn't care about my measly account to handle it for me — and it cost me dearly.
Not only did it cost me in wasted fees, but it cost me in the entire year that my account could have been growing. And it cost me any scrap of confidence I had left in my ability to plan for and obtain a stable future.
Enter My Lightbulb Moment
With a bitter taste in my mouth, I randomly stumbled across a female financial expert who created content for women like me — i.e. terrified and paralyzed by the thought of wading in the murky waters of the stock market.
She was the first person to ever call out my own fear, and start to ease it! She helped me start to see that I didn't have to be afraid of investing, and I could actually do it very conservatively and easily if I wanted.
She also explained the difference between stock market trading (more risky and hands-on) vs. investing (less risky and long-term). She inspired me to start dipping my toes into investing with “done-for-you apps” like Acorns and Stash, that allow you to invest small amounts of money in clumps of ETFs, even if you have no idea what to invest in.
I realized apps like these are great for beginners, or those who don't really want to learn much about investing but want to a pretty safe way to earn more on their savings than they could with a savings account or CD. And I'm really glad I started with these!
However, I soon started wanting to learn more, and to have a little more control over which stocks or ETFs I was choosing. I started learning more about day and swing trading, as well as dividend investing. While I enjoyed dabbling with trading and made more than I lost, it did require some time and focus, and taking losses, no matter how small, was always stressful.
On the other hand, the more I learned about dividend investing, the more I fell in love! For me, dividend investing has a great low-risk, minimal-effort balance, and is perfect for investing long-term!The more I learned about dividend investing, the more I fell in love! For me, dividend investing has a great low-risk, minimal-effort balance, and is perfect for investing long-term!
The Beauty of Dividend Investing
After easing into investing with various investing apps that did a lot of the “thinking” for me, I started wading away from the basics once I started learning more about dividend investing.
In a nutshell, dividend investing is about choosing low-risk stocks (as in they have a long-term track record of holding steady or growing in value) that offer a reasonably high dividend.
A dividend is kind of like interest but comes in the form of quarterly or monthly payments from the companies. And because there is still some risk that comes with investing vs. simply stashing cash in a savings account, some dividends offered by companies are much higher than any interest rate you'll find at a bank!
The most beautiful part of dividend investing is re-investing your dividends, to grow your account exponentially over time, and earn more and more dividends!
Oh and even better, when you find a really great steady stock that grows in value over time, the dividend rate and/or amount will generally increase over time as well! That's how you can really start to move the needle over time and grow your account somewhat passively…
And if you can use a service that doesn't eat into your earnings with trading fees (charged by many services every time you buy or sell one or more stocks), and that also allows you to automatically reinvest your dividends, your account growth can be almost completely passive if you like — after initially funding your account and choosing which stocks to purchase, of course.
Overview of My Dividend Investing Strategy
I currently focus on dividend investing in my Roth IRA (retirement account), and a mix of dividend investing and day and swing trading in my regular investing account(s). I use M1 Finance to manage my IRA and an individual investing account for more long-term dividend investing (i.e. “buy and hold”).
NOTE: For any day or swing trading, I use Robinhood, since you are able to make on-the-spot trades.
For both my IRA and investing accounts, I almost exclusively invest in individual stocks, rather than ETFs, Mutual Funds, Bonds, etc. but there are a few high-yield ETFs. I generally prefer individual stocks, simply because they tend to have higher dividend rates and I know exactly what I'm getting. Also, funds tend to incur small fees over time, and every little bit matters!
For me, a pretty standard sweet spot is between a 3-4% dividend rate, on a very stable (low-risk) stock. Most of the stocks and ETFs I invest in fall in this range. However, I also invest in a smaller amount of higher-risk, higher-dividend stocks and funds.
Best Stock Market Investing Apps for Beginners
After trying MANY options (including that in-person “managed” account), I personally settled on M1 Finance for my Roth IRA and Robinhood App for my main regular investing account, as well as a smaller M1 regular investing account. And I'm very happy with both!
Both of these apps are pretty easy to use (after you've learned a bit about the stock market and the kinds of stocks or funds you want to invest in) and a good level of control to pick and choose individual stocks with no minimums. They also have zero fees.
I highly recommend both of these apps long-term, BUT, if you're a total beginner or just don't want to have to think about it much, you might want to start with a more “done-for-you” investing app, such as Acorns or Stash. These don't give you as much control, and so they don't have as much potential to grow your account. They also can incur small subscription fees that can eat into the profits of a small account. Still, they are great for getting your feet wet, and are better than not investing at all!
>> Don't forget to get your FREE $10 to invest when you open a regular investing account at M1!
My Best Tips on Investing for Beginners
If I were to get started with investing all over again, I'd probably do it just the way I did — so that's what I'll advise you to do (as a total NON-financial advisor of course … i.e. please don't take this as “professional” finance advice, it's just what I did and will continue to do)!
- Start with a tiny amount to invest ($100?) to get your feet wet.
- Use a fee-free APP — and DON'T bother paying someone to manage your account for you!
- Try out a few different apps to see which one suits you best. As a total newbie, you might want to start with a more done-for-you service, and then graduate to M1 and/or Robinhood.
- Learn about stock trading and give it a try if you like, but DON'T invest too much money here, especially if you can't afford to lose any of it.
- Learn as much as you can about DIVIDEND INVESTING — it's awesome!
- Open an IRA as soon as possible to save for retirement, if you haven't already! I use M1 for managing my Roth IRA and highly recommend it! Contribute the full amount each year if possible to maximize exponential account growth sooner, and only focus on a general investing account (like with Robinhood) if you can spare more than the maximum allowed IRA contribution.
Some Helpful YouTubers
There are many Youtubers giving (I assume) great advice, but when I was first getting started I gravitated towards 2 in particular, and learned a ton! I also relied heavily on these guys to help me figure out which stocks to start with, and learn how to analyze stocks for myself so I could choose the best ones for my goals.
Dr. Dividend is super down to earth, explains things well, and his account kind of tracks his own experience from inexperienced to thriving investor. He's basically a “real person” who made me feel like I could do this investing thing too!
He mainly talks about using the Robinhood app, dividend investing as well as day and swing trading.
PPC Ian is all about the dividend investing, and being super conservative with his risk management. He's quirky and practical, and also explains his reasoning for what he's doing very well, including specific stocks he's investing in.
His goal is to keep investing in dividend stocks and reinvesting the dividends until one day he can live off of the dividend checks — sounds pretty great to me!
How Much Money Do You [Actually] Need to Start Investing in the Stock Market?
I'll be honest: the more money you have to invest, the more potential you have to make more money from that investment. It's the classic case of “the rich get richer.”
That said, the beauty of investing is that TIMING also plays a big role, as well as simply educating yourself so you can make wise investing decisions. Even if you only have small amounts to invest now, you should get started with a retirement account ASAP!
The sooner you start investing, the more opportunity you have to grow your account because it has an exponentially cumulative effect. That's why it's so important to start investing in your twenties or even teens if you can, even if you don't have much to invest. It's much harder to play catch up later — I should know!
As I mentioned earlier, you should start with a very small amount anyway while you're learning the ropes, but then as you get more comfortable and have more to invest, you can!
And if you learn how to choose stocks and funds that have a good balance of low risk and high return, you're far less likely to lose money, and even be pretty hands-off if you like. You can sort of treat your investment like a savings account with a waaaaayyyy better interest rate.
One of my biggest regrets is not starting sooner because I was misinformed and intimidated. If you've never thought you could or should get into stock market investing for whatever reason, I hope this has given you some food for thought, if not a push to look a little deeper and give it a try!
If you decide to give it a try, I'd love to hear in the comments! If not, what's holding you back?
>> Don't forget to get your FREE $10 to invest when you open a regular investing account at M1!
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