Investing in stocks, how does it work?

There are several ways to make stock investments. How you buy your shares will depend exclusively on your investment objectives, as well as on the way you want to be actively involved in managing your portfolio.

You can invest in individual stocks, stock ETFs, or mutual funds. You need to understand that for this there is no right or wrong option. Finding the most interesting combination of ETFs, individual stocks and mutual funds usually takes some trial and error as you learn.

Choose the form and accounts for your stock investment

It is possible to buy stocks through an online brokerage or by hiring a robotic or financial advisor who can do this for you. The options are: opening a brokerage account, if you have some minimum investment knowledge.

To gain more knowledge, through instruction and advice, it is worth considering hiring a professional. That is, a financial advisor. If you are looking for a simpler and cheaper way, you have the option of robo-advisors. Another option is a plan offered by companies to buy shares directly.

As for accounts, there are a variety of accounts that allow you to buy stocks. Examples are retirement accounts, taxable investments, and also education savings accounts.

Tips for financing your account

For those considering buying stocks through a retirement account, it is important to set a monthly deposit on a recurring basis. If the retirement plan is employer-sponsored, you must indicate the percentage of salary, or the dollar amount you want to be deducted from it.

For the other investment account models, set a clear investment goal and establish how much of your budget that month can be invested in stocks. Funds can be moved manually from the account, or recurring deposits can be set up to maintain goals.

Keep in mind when determining your investment budget and also funding your account that: some mutual funds on your first purchase have minimum amounts. Note the commissions charged for trading and also the fees charged for mutual funds.

Start investing in stocks and review your portfolio

To be able to start investing, choose the individual stocks, mutual funds or ETFs that fit your preference. If you have chosen a robo-advisor, you will be invested by system the desired amount according to your goals. And if you have chosen a financial advisor, he or she will buy funds or stocks for you.

After a successful execution, the fruits will begin to be reaped. In other words, your funds will not only reap dividends, but may also suffer losses as the economy changes. Consider enrolling in a DRIP, which is a dividend reinvestment plan. In short, these plans take dividends earned from your stocks and automatically buy more.

After you start building your stock portfolio, set a schedule, where you can analyze your investments and even rebalance them, if necessary.