The Guide to Begin Stock Market Investing

Investing your money can be intimidating, and not knowing where to start is frustrating. In order to start investing you must first open a brokerage account, so how about we start there!

There are many different brokerage accounts from Fidelity, who has been around for over 70 years to the popular, millennial-trusted Robinhood investing app. Listed below are a few options that could be considered when choosing a brokerage account.

- M1 Finance: As a fully online broker, you can take advantage of ”zero fee trading“ which might be beneficial when getting your feet wet with investing. Founded April 2015, this is a fairly new company and doesn’t offer much for stock picking suggestions or a guide to investing your money. M1 Finance might be a better tool for investors who want to play a more active role in their investments and trading as apposed to a more passive investor.

- Charles Schwab: Rated #1 for IRA’s by stock brokers.com, Schwab has extensive research access along with consistent customer service, ample tools, the largest selection of commission-free funds, and industry-leading market reports combine to present a great full-service brokerage.

- Vanguard: Last but not least and my personal favorite. Vanguard offers an easy to use interface on there website with invaluable support running through workday business hours. Vanguard has marketed itself as an "at-cost" company that can provide services with no profit margin because it is owned by the mutual funds it sells. What this means is that the company has its account holders best interests held high because the company is fully invested and thriving on the mutual funds, ETF’s and index fund it offers.

All in all brokerage account are everywhere and the one that is right for you would mostly be a preference.

Once you have chosen a reputable broker, you must then decide the type of account to open. This step is extremely important as it affects whether you will be paying taxes on your money now or down the road in retirement.

- IRA: The benefit to this account is that any and all contributions made during any given year is completely tax deductible on your income tax returns. This is because an IRA is considered a pre-tax account and the money put in Is not taxable until at the age of retirement when you take it out. *Maximum contributions is $6,000 per year as of 1-1-2019.

- 401K: This type of account would have a pre-selected broker most of the time. This type of account would be offered at ones job. Companies that offer a 401k follow the same tax guide as the IRA, but instead of writing off your contributions at the end of the year, the money put in is directly added each pay period mith your weekly, bi-weekly or monthly check. The contributions will come out before your taxes do. This also means when is comes time to retire, you will be paying taxes on this as you take money out. A great benefit to the 401k is that a lot of company’s match your contribution. Ranging from about 2% - 6% of your income. Meaning if you elect to contribute 6% of a $300 check, you will contribute $24 and so will your company. (Tax rates depend on amount taken out each year of retirement). *Maximum contributions is $19,000 per year as of 1-1-2019

- Roth IRA: In this type of account your tax rate is dependent on your current income tax rate. This is because you contribute to this account With post-tax earnings. If you have a higher income or if you’re starting your investing later in life, this option may not be as attractive since you pay taxes before you contribute. This means down the road when it comes to retire you can reap the benefits of years and years of compounded interest tax free! *Maximum contributions is $6,000 per year as of 1-1-2019

*Some companies offer a Roth 401k which Is worth looking into.

You do not have to chose one of these although it is recommended. You can just open a generic brokerage account such as options available through the previously mentions Robinhood app that allows you to buy and sell stocks, ETF’s, index funds and mutual funds.

As an investor you must determine what is important to you before deciding what to buy. You must also decide what kind of investor you are. Are you someone who wants to make every single choice in buying and selling? Or do you want to set it and forget it? There are many types of investments you can buy depending on your level of involvement and risk you want to take. The following are available to buy inside a brokerage account

- Individual Stocks: Maintaining complete control over every company in your entire portfolio. Some companies offer a dividend to stock holders. This is basically incentive for holding a stock. Examples: Amazon, McDonalds, AT&T.

- Bonds: More stable than stocks but you can expect a lower return. Some investors balance their portfolios with percentages of bonds to minimize risk such as in retirement date funds.

- Index Funds: buying a complete market. “the oil industry is booming and I don’t want to miss out“ Example: emerging markets consumer ETF

- Mutual Funds: letting the pro handle the trading. Sometimes these have yearly maintenance fees or fees upfront upon purchase. Mostly these have track records of performance since inception. Examples would be specific to the brokerage companies that offer them.

At the end of the day, how you choose to invest is up to you. Once you get some skin in the game it will become so Important to you that even if you do lose money you will certainly learn from it. Start over, do your research and try again. The better ones keep emotions out and research other peoples mistakes before they make their own.

Now you‘re on your way!