Have you ever heard stories of people that make thousands of dollars in the stock market overnight? Well, I’m here to tell you that although it probably won’t happen overnight, you can really make thousands of dollars while you sleep. Although investing has its risks, the stock market is a great way to grow your money long term. Think about it like this- if you place $100 in a savings account with an average interest rate of .01% then in a year you would’ve made $.01 in that account leaving you with a safe $100.01. However, if you would’ve instead invested those same $100 into a stock, for example Disney- this stock went from $100 in January of 2019 to $150 in January of 2020, then in a year you would have made $50. Not too bad.
If you’re following the Corona Virus news then you already know that people are panicking and buying groceries impulsively and completely avoiding outside contact. What does this mean for stocks? It means that companies are projecting great losses around the world and the stock market is crashing because of it. The same Disney stock that reached a whopping $150 in January is now listed at $93. Like I mentioned earlier, investing in stocks is a risk and the biggest risk you run is having the market completely crash and losing your earnings (and your principal).
Now, the good news is that if you haven’t invested in the stock market then this is pretty much the best time to start. You would be buying stocks at a very low price and with time these companies will recover making your money grow. So, where to start? You can start anywhere you’d like. If your intuition says that technological advances will be making strides in the following months (or years) then invest in technology companies like Microsoft, Apple, Intel (just to name a few). My suggestion is to follow the news and see which companies are taking the biggest hits such as airlines, hotels and cruises, and invest in them now that their shares will be listed for very low. Once this virus news blows over and people feel more comfortable traveling, then you’re investment will be making you money plus dividends.
Before I suggest platforms for investing, lets cover a few terms that will help you understand the trading lingo:
Ticker- Every Company has a ticker symbol which is how you look them up and find them. For example Disney is DIS.
Dividend- a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its pockets (or reserves).
ETF- Exchange-Traded-Funds (Diversified group of stocks in one fund)
Please be advised that if you’re not comfortable giving in your personal information then you wont be able to buy stocks. The government has to trace your earnings (or losses) in order to ensure that you pay taxes (you can also report the loss on your taxes). If you’re interested in getting started with investing then look at these options that may help you take the plunge.
This is a free app that is extremely easy to set up. Robinhood gives you the option to search specific stocks, industries by category and links up to your bank so you can invest like a pro from the comfort of your smart phone. You can download the app on your phone, computer and/or tablet and it’s very easy to maneuver. Also, as a plus they give you a free stock when you refer people and they create an account (they also get a free stock).
If you’d rather invest your money without the hassle of choosing stocks, then robo-advisors are a great option; these give you the ability to set goals and depending on the risk you’d like to take then it will invest in specific ETF’s. The downside of using a robo-advisor is that there is an annual expense ratio fee (which is relatively small and varies depending on the brokerage) plus an added cost of .25% of your earnings. However, this is a very hassle-free way to get started with investing. Some of the platforms that offer these services are listed below:
Betterment- charges an annual fee of 0.25% for digital portfolio management.
Wealthfront- charges 0.25% for management, though the first $5,000 invested.
Acorns- charges a flat fee of $1 per month for accounts of less than $5,000 and a 0.25% fee annually for accounts larger than that.
So what do you think? Do you have an extra $100 to invest? Maybe a year from now those same $100 could be much more.