How To Start Investing In Stocks: A Beginner’s Guide

Investing is a way to set aside money while you are busy with life and have that money work for you so that you can fully reap the rewards of your labour in the future. Investing is a means to a happier ending. Legendary investor Warren Buffett defines investing as “…the process of laying out money now to receive more money in the future.”1 The goal of investing is to put your money to work in one or more types of investment vehicles in the hopes of growing your money over time.

Discount brokers used to be the exception, but now they’re the norm. Discount online brokers give you tools to select and place your own transactions, and many of them also offer a set-it-and-forget-it robo-advisory service too. As the space of financial services has progressed in the 21st century, online brokers have added more features, including educational materials on their sites and mobile apps.

It pays to shop around some and to check out our broker reviews before deciding on where you want to open an account. We list minimum deposits at the top of each review. Some firms do not require minimum deposits. Others may often lower costs, like trading fees and account management fees, if you have a balance above a certain threshold. Still, others may give a certain number of commission-free trades for opening an account.As economists like to say, there’s no free lunch.

Now, imagine that you decide to buy the stocks of those five companies with your $1,000. To do this, you will incur $50 in trading costs—assuming the fee is $10—which is equivalent to 5% of your $1,000. If you were to fully invest the $1,000, your account would be reduced to $950 after trading costs. This represents a 5% loss before your investments even have a chance to earn.

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