How to Invest in Stock Markets

By Nicki Howell

  • Overview

    Investing in the stock market allows individuals to potentially earn higher returns then more conservative investments. On average, stocks earn about a 10 percent return in normal market conditions. But with higher earnings also comes higher exposure to market risks, such as economic downturn and recession. Having useful resources for choosing the right stocks and a trusted full-service brokerage can assist in maximizing your earnings.
    • Step 1

      Read the stock market news daily. Great tips on stocks can be found in publications such as Wall Street Journal Online (see Resources below) and in your local newspaper's business section. Before investing any real money, choose a few stocks to monitor, and evaluate the success of your choices for practice.
    • Step 2

      Invest with a full-service brokerage if you are new to investing. They will cost more, but provide advice on stocks and you can ask questions anytime. Once you get a little experience under your belt, switch to an online brokerage to save money on fees.

    • Step 3

      Check out online brokerages once you have experience with buying and trading stocks. Companies like E-Trade (see Resources below) provide basic services for buying and selling stocks, without the higher fees. But keep in mind you will be on your own for choosing the right stocks.
    • Step 4

      Complete an application to open your stock market trading account. Whether you are choosing a full-service or online brokerage firm, an application will need to be completed. Funds will also need to be deposited into the account via bank wire or check.
    • Step 5

      Track and evaluate your stock portfolio monthly. This gives you an opportunity to determine which stocks are performing well, and which are underperforming. If you are with a full-service brokerage firm, they can make these adjustments for you. But if you are managing your own funds, check out stock market resources such as MSN Money (see Resources below) to get recommendations and tips.
    • Skill: Moderate
    • Tip: Diversify your portfolio to reduce market risk. Don't invest all of your money in stocks; instead diversify your portfolio with stocks, mutual funds and bonds.
    • Warning:
    • Be aware of all fees when using a full-service brokerage firm. Asking for a fee disclosure sheet will allow you to be aware of all fees assessed to your account. This will also assist in comparing brokerage firms.

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