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If you trade the forex markets regularly, chances are that a lot of your trading is of the short-term variety; i. From my experience, there is one major flaw with this type of trading: h igh-speed computers and algorithms will spot these patterns faster than you ever will. When I initially started trading, my strategy was similar to that of many short-term traders. That is, analyze the technicals to decide on a long or short position or even no position in the absence of a clear trendand then wait for the all-important breakout, i. I can't tell you how many times I would open a position after a breakout, only for the price to move back in the opposite direction - with my stop loss closing me out of the trade. More often than not, the traders who make the money are those who are adept at anticipating such a breakout before it happens.

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Investing in share market

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Looking to take control of your credit card debt so you can start investing sooner? The right balance transfer card can help you save hundreds on interest charges. Select recommends the U. If you decide to go the balance transfer route, make sure you have a clear debt payoff plan, so you don't get stuck paying high interest rates once the intro period ends.

An emergency fund or a buffer savings account comes in handy when unexpected circumstances arise. If you need to pay for a car repair, having the cash on hand is especially useful so you don't risk running into credit card debt. Plus, if the Covid pandemic has taught us anything, it's that having money to pay for necessary expenses is essential, especially as millions lost their jobs and struggled to find work for many months. Think about it: What will you do if your money is stuck in an investment account and you need to buy groceries for the week?

Johnson suggests saving up three months worth of expenses, ideally in a separate savings account. If that feels like too much, he suggests aiming to save one month to start, then expand that goal to save more. McPherson adds that someone with a steady income will have different savings needs than someone who is self-employed. While all the media coverage makes it seem like many investors have earned high returns on their investments from crypto or meme stocks, the reality is many also lost money as values plummeted over time.

Doing your research will help you understand the types of risks involved in investing, so you can be better prepared before you get started. You may not be able to prevent your investments from losing value. However, you can avoid paying high fees on investment products, which eat into earnings over time.

Using investing apps like Robinhood and Webull is a good first step. Both brokerages offer commission-free trading on stocks, options, ETFs and crypto, with no minimums required. See Select's list of the best investing apps to learn more. You also want to make sure you understand the types of investments best suited for your financial goals. You can also consider reaching out to a fiduciary financial advisor for assistance. These types of professionals are legally obligated to look out for your best interest — you won't be sold investments solely based on the highest commissions.

If you're going the DIY route, start by learning basic investing terminology like expense ratios, management fees, dividends and volatility. Plus, do your research so you understand the different types of investment vehicles such as stocks , bonds , mutual funds and exchange traded funds ETFs.

For instance, while mutual funds and ETFs aren't necessarily as sexy as investing in individual stocks, they're less risky. That's because both are composed of a basket of securities — the ETF or mutual fund provider owns the underlying stock or bond, and you, the investor, can purchase a share of that basket. All this to say, you're investing in a variety of stocks and bonds, diversifying your investment portfolio.

In many cases, mutual funds have higher fees than ETFs — here's where research comes in handy. For those who are interested in more advanced strategies, many brokerages allow you to open a stock market simulator account, so you can trade with a set amount of play money to learn the ropes. The best place to start investing is through an employer-sponsored retirement plan if you can, say both Johnson and McPherson. Not contributing to a k account can have some serious downsides.

Depending on where you work, your contributions will be matched, up to a certain percentage into your personal contribution. Many k providers offer the same types of mutual funds and ETFs as other brokerages, so don't feel like you're missing out. But if your company doesn't offer any matching, you might want to take a closer look at your k fees to make sure you're not overpaying.

Even better, invest in all three! Investing offers plenty of benefits like earning higher returns than high-yield savings accounts and offering you the opportunity to reach financial goals such as buying a house or enjoying a comfortable retirement. For those who have a lot of high-interest debt, don't have a savings buffer and aren't clear about their priorities, waiting to invest might be the better choice.

If you decide it's not a good idea for now, you can still take proactive steps to prepare yourself to invest in the future. That can include making a more aggressive debt repayment plan, setting up automatic contributions to a dedicated savings account and reading books on investing. For example, if you have 30 years to save for retirement, you can use a retirement calculator to assess how much you might need and how much you should save each month.

When setting a budget, make sure you can afford it and that it is helping you reach your goals. Now it's time to start doing research on what to invest in. There are different ways to invest in the stock market and there's a lot to know so doing your research is well worth your time.

Stocks are a good option to consider if you want to invest in specific companies. Just keep in mind that you should look into the company itself and how it's performing over time:. For example, are you looking for a dividend stock? Look at the dividend history. Are you looking for a growth stock? Look at the earnings per share : Is it showing consistent growth? So you want to take steps to look at your income and expense balance sheets and make sure you're hitting the right bucket — which refers to the grouping of related assets or categories — for your investing needs.

For example, investing in small-cap , mid-cap , or large-cap stocks , are a way to invest in different-sized companies with varying market capitalizations and degrees of risk. If you're looking to go the DIY route or want the option to have your securities professionally managed, you can consider ETFs, mutual funds, or index funds:. You want to get familiar with the various types of investing vehicles and understand the risks and rewards of each type of security. For example, stocks can be lucrative but also very risky.

As we mentioned before, mutual funds are actively managed, whereas index-based ETFs and index funds are passively managed. This is important to keep in mind because your costs and responsibilities vary depending on an active versus passive approach. Mutual funds are professionally managed and may have higher fees. With ETFs and index funds, you can purchase them yourself and may have lower fees. Having a diverse portfolio can help you prepare for the risk and not have all of your eggs in one basket.

You can use that money to purchase a certain number of shares in ABC Company, the underlying price of which fluctuates while the stock market is open. Or you could choose to invest it in a stock mutual fund, which invests in many different stocks and is priced at the close of each market at the end of the day.

The main things to consider when defining your investment strategy are your time horizon, your financial goals, risk tolerance, tax bracket , and your time constraints. Based on this information, there are two main approaches to investing. After choosing your investment strategy, you want to choose an investing account that can help you get started. Decide if you want to do it yourself or get a professional to help out.

When considering active versus passive investing and if you should DIY it or get a professional, you want to consider several factors. Look at total fees, the time commitment involved and any account minimums as well. The easiest way for many people to get started with investing is to utilize their employer-sponsored k. Talk to your employer about getting started and see if they'll match part of your contributions.

The key is to choose an investment account that fits with your budget and investment strategy, open an account, and then submit an initial deposit. Just know that when you submit money, it's in a cash settlement account and not yet actively invested I made this mistake when I first started investing!

Now it's time to start managing your portfolio. So that means buying stocks, ETFs, or index funds with their appropriate codes from your account. That is when your money is actually invested. But it doesn't stop there — you also want to continue to add to your portfolio so consider setting up auto-deposits each month. You can also re-invest any earnings or dividends to help build growth over time. Diversify your portfolio by investing in different types of investment vehicles and industries.

A buy-and-hold approach is typically better for beginner investors. It can be tempting to try out day trading, but that can be very risky. Lastly, you'll want to rebalance your portfolio at least once a year.

As your portfolio grows and dips, your asset allocation — or how much you've invested in stocks, bonds, and cash — will have shifted. Rebalancing is basically resetting that to the proportion you want. Over time, as stocks and bonds perform differently, those weights will drift," explains Senour. There's no "perfect" time frame for rebalancing as some financial professionals suggest doing so every quarter, but conventional wisdom says at a minimum rebalancing at least once per year can make sense.

Continuing to invest money and rebalance your portfolio periodically will help you keep your investments in good shape. Learning how to invest in stocks can be overwhelming, especially if you're just getting started. Figuring out your goals and determining a budget are the first steps to take. After that, get acquainted with various investment vehicles and choose the right ones for your financial goals and risk tolerance.

The key is to get started and be consistent. The best investment strategy is the one you'll stick with. Just be aware all investing comes with risk and do your research on any related fees. Back to Top A white circle with a black border surrounding a chevron pointing up.

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Stock investing for dummies canada Use our investment calculator to see how compounding returns work in investing. Are you sure you want to rest your choices? Individual stocks are another story. While all the media coverage makes it seem like many investors have earned high returns on their investments from crypto or meme stocks, the reality is many also lost money as values plummeted over time. Want to Retire Early?
Live forex charts usd/jpy For this reason, a key consideration for investors is how to manage their risk in order to achieve their financial goals, whether they are short- or long-term. Also, as the success of index investing has shown, you might do better with a roboadvisor if your goal is long-term wealth building. We value your trust. Nerdy tip: If you're tempted to open a brokerage account but need more advice on choosing the right one, see our latest roundup of the best brokers for stock investors. The last thing we'll binary options mikhail on this: Investing is a long-term game, so you shouldn't invest money you might need in the short term.
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Still others may offer a certain number of commission-free trades for opening an account. Though many brokers have been racing recently to lower or eliminate commissions on trades, and ETFs offer index investing to everyone who can trade with a bare-bones brokerage account, all brokers have to make money from their customers one way or another. In most cases, your broker will charge a commission every time you trade stock, either through buying or selling.

Some brokers charge no trade commissions at all, but they make up for it in other ways. There are no charitable organizations running brokerage services. Depending on how often you trade, these fees can add up and affect your profitability. Investing in stocks can be very costly if you hop into and out of positions frequently, especially with a small amount of money available to invest.

Remember, a trade is an order to purchase or sell shares in one company. If you want to purchase five different stocks at the same time, this is seen as five separate trades, and you will be charged for each one. If your investments do not earn enough to cover this, you have lost money just by entering and exiting positions. If you plan to trade frequently, check out our list of brokers for cost-conscious traders. Besides the trading fee to purchase a mutual fund, there are other costs associated with this type of investment.

Mutual funds are professionally managed pools of investor funds that invest in a focused manner, such as large-cap U. An investor will incur many fees when investing in mutual funds. One of the most important fees to consider is the management expense ratio MER , which is charged by the management team each year based on the number of assets in the fund.

The MER ranges from 0. You may see a number of sales charges called loads when you buy mutual funds. Some are front-end loads , but you will also see no-load and back-end load funds. Be sure that you understand whether a fund that you are considering carries a sales load prior to buying it. For the beginning investor, mutual fund fees are actually an advantage compared to commissions on stocks.

This is because the fees are the same regardless of the amount that you invest. The term for this is called dollar-cost averaging DCA , and it can be a great way to start investing. Diversification is considered to be the only free lunch in investing. In terms of diversification, the greatest difficulty in doing this will come from investments in stocks.

As mentioned earlier, the costs of investing in a large number of stocks could be detrimental to the portfolio. This will increase your risk. This is where the major benefit of mutual funds or ETFs comes into focus. Both types of securities tend to have a large number of stocks and other investments within their funds, which makes them more diversified than a single stock. People new to investing who wish to gain experience trading without risking their money in the process may find that a stock market simulator is a valuable tool.

There are a wide variety of trading simulators available, including those with and without fees. Investopedia's simulator is entirely free to use. Stock market simulators offer users imaginary, virtual money to "invest" in a portfolio of stocks, options, ETFs, or other securities. These simulators typically track price movements of investments and, depending on the simulator, other notable considerations such as trading fees or dividend payouts.

Investors make virtual "trades" as if they were investing real money. Through this process, simulator users have the opportunity to learn about the ins and outs of investing—and to experience the consequences of their virtual investment decisions —without running the risk of putting their own money on the line. Some simulators even allow users to compete against other participants, providing an additional incentive to invest thoughtfully.

Full-service brokers provide a broad array of financial services, including offering financial advice for retirement, healthcare, and a host of investment products. They have traditionally catered to high-net-worth individuals and often require significant investments. Discount brokers have much lower thresholds for access, but also tend to offer a more streamlined set of services.

Discount brokers allow users to place individual trades and also increasingly offer educational tools and other resources. Investing is a commitment of resources now toward a future financial goal. There are many levels of risk, with certain asset classes and investment products inherently much riskier than others. However, essentially all investing comes with at least some degree of risk: it is always possible that the value of your investment will not increase over time.

For this reason, a key consideration for investors is how to manage their risk in order to achieve their financial goals, whether they are short- or long-term. Most brokers charge customers a commission for every trade. Because of the cost of commissions, investors generally find it prudent to limit the total number of trades that they make to avoid spending extra money on fees. Certain other types of investments, such as exchange-traded funds, carry fees in order to cover the costs of fund management.

It is possible to invest if you are just starting out with a small amount of money. You will also need to choose the broker with which you would like to open an account. The Wall Street Journal. Charles Schwab. Mutual Funds. Your Money. Personal Finance. Your Practice. Popular Courses. Table of Contents Expand. Table of Contents. What Kind of Investor Are You? Online Brokers. Investing Through Your Employer.

Minimums to Open an Account. Commissions and Fees. Mutual Fund Loads. Diversify and Reduce Risks. Stock Market Simulators. The Bottom Line. Investopedia Investing. Your age is a major consideration, and so are your particular risk tolerance and investment objectives. Let's start with your age.

The general idea is that as you get older, stocks gradually become a less desirable place to keep your money. If you're young, you have decades ahead of you to ride out any ups and downs in the market, but this isn't the case if you're retired and reliant on your investment income. Here's a quick rule of thumb that can help you establish a ballpark asset allocation.

Take your age and subtract it from This is the approximate percentage of your investable money that should be in stocks this includes mutual funds and ETFs that are stock based. The remainder should be in fixed-income investments like bonds or high-yield CDs.

You can then adjust this ratio up or down depending on your particular risk tolerance. For example, let's say that you are 40 years old. If you're more of a risk taker or are planning to work past a typical retirement age, you may want to shift this ratio in favor of stocks. On the other hand, if you don't like big fluctuations in your portfolio, you might want to modify it in the other direction.

All of the advice about investing in stocks for beginners doesn't do you much good if you don't have any way to actually buy stocks. To do this, you'll need a specialized type of account called a brokerage account. And opening a brokerage account is typically a quick and painless process that takes only minutes.

You can easily fund your brokerage account via EFT transfer, by mailing a check, or by wiring money. Opening a brokerage account is generally easy, but you should consider a few things before choosing a particular broker:. First, determine the type of brokerage account you need. For most people who are just trying to learn stock market investing, this means choosing between a standard brokerage account and an individual retirement account IRA.

Both account types will allow you to buy stocks, mutual funds, and ETFs. The main considerations here are why you're investing in stocks and how easily you want to be able to access your money. If you want easy access to your money, are just investing for a rainy day, or want to invest more than the annual IRA contribution limit , you'll probably want a standard brokerage account. On the other hand, if your goal is to build up a retirement nest egg, an IRA is a great way to go.

IRAs are very tax-advantaged places to buy stocks, but the downside is that it can be difficult to withdraw your money until you get older. The majority of online stock brokers have eliminated trading commissions, so most but not all are on a level playing field as far as costs are concerned.

However, there are several other big differences. For example, some brokers offer customers a variety of educational tools, access to investment research, and other features that are especially useful for newer investors. Others offer the ability to trade on foreign stock exchanges.

And some have physical branch networks, which can be nice if you want face-to-face investment guidance. There's also the user-friendliness and functionality of the broker's trading platform. I've used quite a few of them and can tell you firsthand that some are far more "clunky" than others. Many will let you try a demo version before committing any money, and if that's the case, I highly recommend it.

Browse top stock brokerages. Now that we've answered the question of how you buy stock, if you're looking for some great beginner-friendly investment ideas , here are five great stocks to help get you started. Of course, in just a few paragraphs we can't go over everything you should consider when selecting and analyzing stocks, but here are the important concepts to master before you get started:.

It's a good idea to learn the concept of diversification , meaning that you should have a variety of different types of companies in your portfolio. However, I'd caution against too much diversification. Stick with businesses you understand -- and if it turns out that you're good at or comfortable with evaluating a particular type of stock, there's nothing wrong with one industry making up a relatively large segment of your portfolio.

Buying flashy high-growth stocks may seem like a great way to build wealth and it certainly can be , but I'd caution you to hold off on these until you're a little more experienced. It's wiser to create a "base" to your portfolio with rock-solid, established businesses.

If you want to invest in individual stocks, you should familiarize yourself with some of the basic ways to evaluate them. Our guide to value investing is a great place to start. There we help you find stocks trading for attractive valuations. And if you want to add some exciting long-term-growth prospects to your portfolio, our guide to growth investing is a great place to begin.

Related: When to Sell Stocks. Here's one of the biggest secrets of investing, courtesy of the Oracle of Omaha himself, Warren Buffett. You do not need to do extraordinary things to get extraordinary results. Note: Warren Buffett is not only the most successful long-term investor of all time, but also one of the best sources of wisdom for your investment strategy.

The most surefire way to make money in the stock market is to buy shares of great businesses at reasonable prices and hold on to the shares for as long as the businesses remain great or until you need the money. If you do this, you'll experience some volatility along the way, but over time you'll produce excellent investment returns.

Here's your step-by-step guide for opening a brokerage account :. It is generally considered the best indicator of how U. Why do we invest this way? Learn More. Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of Discounted offers are only available to new members.

Calculated by Time-Weighted Return since Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.

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Both traditional brokerage companies such as Fidelity and TD Ameritrade, and newer apps such as Robinhood and Webull offer zero-commission trades from time to time. That makes it a lot easier to buy stocks without the worry of commissions eating into your returns down the line. You can also join an investment club if you don't want to go it alone.

Joining one can give you more information at a reasonable cost, but it takes a lot of time to meet with the other club members, all of whom may have various levels of expertise. You might also be required to pool some of your funds into a club account before investing.

Another way to invest in stocks is through your retirement account. Your employer might offer a k or b retirement plan as part of your benefits package. These accounts invest your money for retirement, but your investment options are typically limited to the choices provided by your employer and the plan provider. You can open an IRA on your own with your bank or brokerage company if your employer doesn't offer a retirement plan.

There are two types of stockbrokers : full-service and discount. Newer investors can benefit from the resources provided by full-service brokers, while frequent traders and experienced investors who perform their own research might lean toward platforms with no commission fees. A money manager might also be an option. Money managers select and buy the stocks for you, and you pay them a hefty fee—usually a percentage of your total portfolio.

This arrangement takes the least amount of time, because you can meet with them just once or twice a year if the manager does well. The U. Securities and Exchange Commission SEC offers helpful advice on how to check out your investment professional before allowing them to manage your money and funds.

You might have to put in more time managing your investments if you want low fees. You'll likely have to pay higher fees if you want to outperform the market, or if you want or need a lot of advice. Knowing when to sell is just as important as buying stocks. Most investors buy when the stock market is rising and sell when it's falling, but a wise investor follows a strategy based on their financial needs.

Keep an eye on the major market indices. The three largest U. Don't panic if they enter a correction or a crash. These events don't tend to last very long, and history has shown that the market will climb again. Losing money is never fun, but it's smart to weather the storm of a down market and hold onto your investments, because they will probably rise again. Learning how to invest in stocks might take a little time, but you'll be on your way to building your wealth when you get the hang of it.

Read various investment websites, test out different brokers and stock-trading apps, and diversify your portfolio to hedge against risk. Keep your risk tolerance and financial goals in mind, and you'll be able to call yourself a shareholder before you know it. Penny stocks , also known as microcap stocks, are low-priced shares in small companies. The SEC warns that these stocks can be extremely volatile and difficult to trade once you own them. Be extremely cautious about investing in penny stocks.

Volume measures the number of shares traded in a given time period. It typically denotes the amount traded in a single trading day. Growth in trade volume for a given stock is typically seen as a sign of strength. While there is no exact number of stocks every investor should own, many experts recommend somewhere between 10 and 30 stocks.

The basic rule of thumb is to try to achieve enough diversity in your portfolio to protect yourself from losses while not spreading your investments too thin. The ideal number of stocks for you is the number that achieves this goal. Columbia Business School. Securities and Exchange Commission. Charles Schwab. Table of Contents Expand. Table of Contents. What Are Stocks? Blue-Chip Stocks. Preferred Stocks. Finding Stocks for Your Portfolio. How To Buy Stocks.

Use Your Retirement Account. Selling Stocks. Part of. How to Invest in Stocks Overview Stocks Types of Stock. Trading Stocks. Learn about our editorial policies. Reviewed by Chip Stapleton. Learn about our Financial Review Board. Key Takeaways Stocks represent legal ownership in a company; you become part owner of the company when you purchase shares. Dividends are usually cash payments many companies send out to their shareholders.

People generally mean common stocks when they talk about buying stocks. Expect to experience a stock split at some point if you invest in individual stocks. What are penny stocks? One of the best ways for beginners to get started investing in the stock market is to put money in an online investment account, which can then be used to invest in shares of stock or stock mutual funds.

With many brokerage accounts, you can start investing for the price of a single share. Some brokers also offer paper trading , which lets you learn how to buy and sell with stock market simulators before you invest any real money. Learn what it is and how to open one.

There are several ways to approach stock investing. Choose the option below that best represents how you want to invest, and how hands-on you'd like to be in picking and choosing the stocks you invest in. Virtually all of the major brokerage firms and many independent advisors offer these services, which invest your money for you based on your specific goals. In many ways, it teaches new investors some of the most proven investing methods: making small contributions on a regular basis, focusing on the long-term and taking a hands-off approach.

Most k s offer a limited selection of stock mutual funds, but not access to individual stocks. Once you have a preference in mind, you're ready to shop for an account. Limited time offer. Terms apply. Generally speaking, to invest in stocks, you need an investment account. For the hands-on types, this usually means a brokerage account. For those who would like a little help, opening an account through a robo-advisor is a sensible option.

We break down both processes below. An important point: Both brokers and robo-advisors allow you to open an account with very little money. An online brokerage account likely offers your quickest and least expensive path to buying stocks, funds and a variety of other investments. We have a guide to opening a brokerage account if you need a deep dive.

You'll want to evaluate brokers based on factors such as costs trading commissions, account fees , investment selection look for a good selection of commission-free ETFs if you favor funds and investor research and tools. A robo-advisor offers the benefits of stock investing, but doesn't require its owner to do the legwork required to pick individual investments.

Robo-advisor services provide complete investment management : These companies will ask you about your investing goals during the onboarding process and then build you a portfolio designed to achieve those aims. This may sound expensive, but the management fees here are generally a fraction of the cost of what a human investment manager would charge: Most robo-advisors charge about 0.

And yes — you can also get an IRA at a robo-advisor if you wish. One thing to note is that although robo-advisors are relatively inexpensive, read the fine print and choose your provider carefully. Some providers require a certain percentage of an account to be held in cash. The providers generally pay very low interest on the cash position, which can be a major drag on performance and may create an allocation that is not ideal for the investor.

If you choose to open an account at a robo-advisor, you probably needn't read further in this article — the rest is just for those DIY types. Going the DIY route? Don't worry. Stock investing doesn't have to be complicated. For most people, stock market investing means choosing among these two investment types:. Stock mutual funds or exchange-traded funds. Mutual funds let you purchase small pieces of many different stocks in a single transaction. When you invest in a fund, you also own small pieces of each of those companies.

You can put several funds together to build a diversified portfolio. Note that stock mutual funds are also sometimes called equity mutual funds. Individual stocks. Building a diversified portfolio out of many individual stocks is possible, but it takes a significant investment and research.

If you go this route, remember that individual stocks will have ups and downs. If you research a company and choose to invest in it, think about why you picked that company in the first place if jitters start to set in on a down day. The upside of stock mutual funds is that they are inherently diversified, which lessens your risk. For the vast majority of investors — particularly those who are investing their retirement savings — a portfolio made up of mostly mutual funds is the clear choice.

But mutual funds are unlikely to rise in meteoric fashion as some individual stocks might. The upside of individual stocks is that a wise pick can pay off handsomely, but the odds that any individual stock will make you rich are exceedingly slim.

See our list of the best brokers for ETF investing. New investors often have two questions in this step of the process:. How much money do I need to start investing in stocks? The amount of money you need to buy an individual stock depends on how expensive the shares are. Share prices can range from just a few dollars to a few thousand dollars.

If you want mutual funds and have a small budget, an exchange-traded fund ETF may be your best bet. How much money should I invest in stocks? Individual stocks are another story. A general rule of thumb is to keep these to a small portion of your investment portfolio. Stock market investments have proven to be one of the best ways to grow long-term wealth. Stock investing is filled with intricate strategies and approaches, yet some of the most successful investors have done little more than stick with stock market basics.

If your portfolio is too heavily weighted in one sector or industry, consider buying stocks or funds in a different sector to build more diversification. Finally, pay attention to geographic diversification, too. You can purchase international stock mutual funds to get this exposure. Yes, if you approach it responsibly. One of the best is stock mutual funds, which are an easy and low-cost way for beginners to invest in the stock market.

These funds are available within your k , IRA or any taxable brokerage account. The other option, as referenced above, is a robo-advisor , which will build and manage a portfolio for you for a small fee. Generally, yes, investing apps are safe to use. Even in these instances, your funds are typically still safe, but losing temporary access to your money is still a legitimate concern.

However, investing small amounts comes with a challenge: diversifying your portfolio. Diversification, by nature, involves spreading your money around. The less money you have, the harder it is to spread. One solution is to invest in stock index funds and ETFs. These often have low investment minimums and ETFs are purchased for a share price that could be lower still , and some brokers, like Fidelity and Charles Schwab, offer index funds with no minimum at all.

And, index funds and ETFs cure the diversification issue because they hold many different stocks within a single fund. The last thing we'll say on this: Investing is a long-term game, so you shouldn't invest money you might need in the short term.

That includes a cash cushion for emergencies.