Ready to Invest but Not Sure How? Start here!
1. Assess Your Finances and Find out How Much You Can Invest
Investing blindly is one of the worst methods of investing and the reason so many fail. Knowing how much you have in your bank accounts, how much income you expect, and maintaining an emergency fund to cover the unexpected is crucial before you can invest. For a youthful investor, expenses for 1-3 months of frugal living should be enough for an emergency fund (less than $500)
2. Do Your Research and Investing Homework
Take advantage of the free resources on the Youthfulinvestor.com. Get yourself a cheap guide to stocks and investing strategies such as Bloomberg’s Investing 101 or The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits). Watch colorful commentary that is free to view at CNBC.com with Mad Money and Jim Cramer or The Suze Orman Show.
3. Come Up with a Game Plan and Strategy for Asset Allocation
How much are you going to invest and where is it going to go? The youthful investor does not have enough to spread around everywhere but as has the advantage of being young and the ability to take on more risk. Use this free and helpful Asset Allocation Calculator to get a rough idea of where your money should go. What are your goals? Day trade? Hold and homework? Are you going to be most aggressive or mostly conservative? How much sleep can you afford to lose at night?
4. Find Yourself a Broker or Invest Directly
Find low costs and no minimums with excellent costumer service when you Another excellent option for youthful investors looking to learn as they go at Betterment: And get a $25 Bonus! for opening an account
If you are confident to pick individual companies stocks to invest in, find the lowest cost and lowest minimum Direct Stock Purchase Plans DSPs and DRIPs at: ComputerShare and Bank New York Mellon. Here you will find perennial favorites like Coca Cola, Microsoft, Walmart, etc.
5. Continue Your Investing Homework
I recommend doing 1 hour of homework each week on each holding or stock you have. I think that is fair. Keep an eye on the news and when you have time do some in depth analysis of your holdings. This is probably best done through using free Trefis research tools.
Don’t be afraid to ride some wins and sell some losses. Re-balancing means adjusting your portfolio with the times. If you made a big win, cash in some to buy another great value or keep some of the money for yourself. You deserve it! As for losses, sell holdings or stocks that are perennial losers, but consider buying more of excellent stocks that are selling for a bargain.