Investment Options for a Stock Market Beginner
Plenty of Options are There for Those Starting Out
Aug 20, 2009
The process of figuring out how the stock market works and how to get started investing can be pretty intimidating when you are getting started, but the truth is there are plenty of options for the beginning investor. As is the case with most everything in life, a person will certainly do better if they are educated before they begin. What is the best way to get educated?
The single best way to learn the stock market is probably to follow those who have been successful. There are some terrific investment books for beginners that serve the purpose very well by acting as a guide to getting started in the stock market. Don't feel as if you need to be an expert in the stock market, because that is certainly not the case. A stock market beginner has plenty of asset options to choose from, they just need to know where to start!
Stock Market Simulation Games
Stock market simulation games, or stock market simulators, are a great way to get started in the stock market without actually putting your hard earned money on the line. Investopedia's Stock Simulator and Virtual Stock Exchange from Marketwatch are two of the most popular stock market simulation games on the Internet. These games allow a beginner to set up a portfolio of stocks and enter specific contests against friends or anyone from the web. This is a great tool to track progress as time goes and get a feel for understanding how the stock market works. This is definitely the best way for a stock market beginner to get their feet wet in the market.
Dividend Reinvestment Plans and Direct Purchase Plans
Many investors often believe that they cannot start investing in the stock market because they don't have enough money. This is not true at all. A Dividend Reinvestment Plan (DRIP) and a Direct Purchase Plan (DPP) both serve as a terrific option for new investors. What is the difference between a DRIP and a DPP? They are essentially the same except a DPP is for the first time investor and a DRIP can only be used once the investor already have shares and your dividends can be reinvested.
These plans allow the individual to go directly through the company you wish to buy shares of stock in and purchase the stock, avoiding the middleman altogether. These two plans have two major benefits that every investor can enjoy. The first is the lack of any kind of investment fees. No fees to pay the broker to purchase the stock! The second is the extremely low minimum required to invest in the stock. These plans often offer minimum investment amounts as low as $20 or $25. Direct Purchase Plans are a great way to get started investing with small amounts of money.
Mutual Funds
Mutual funds are sometimes overlooked as a way for a stock market beginner to get their portfolio started, but the benefits of using mutual funds are quite numerous. The single biggest benefit to an investing starting out is that it provides instant diversification. This is a big deal for an investor dealing with small amounts of money. Additionally, you are receiving professional money management, and if you are keen to understanding mutual fund fees and expenses you won't have to pay a great deal for it. Investing in mutual funds is a great way to benefit from the stock market without all of the day to day hassles.
Learn the Stock Market Over Time
As a stock market beginner the best advice a new investor will ever receive is to learn the stock market over time and learn from mistakes that are made. Everyone makes mistakes in life and every investor is bound to make mistakes in investing, but it is those who don't learn from the mistakes that always stay behind the rest of the pack.
References:Robertson, Michael "Direct Stock Purchase Plans: A Better Way to Invest" April 7, 2009. August 19, 2009.
 |
