This post is sponsored by The Motley Fool and contains affiliate links. Join The Motley Fool Stock Advisor Subscription here for a $99 introductory offer*.
You’ve probably heard at least one of these before: “Investing is important!” “You’re losing money by not investing!” or even the myth of “Investing needs a lot of money!” For new investors it can be overwhelming to hear. You know you should be doing it but where do you even begin?
And what is investing exactly? And how do you go about doing it? How do you make money in the stock market? We’re going to take a deeper look into these questions and I’ll share with you a tool that makes picking individual stocks easier than falling asleep at night.
How To Make Money In The Stock Market
First of all, why does investing matter?
When you think of investing, do you picture the New York Stock Exchange? How about Wall Street? These days, it doesn’t quite look like that for the average investor. Investing, in short, is purchasing a financial product (like a stock, bond, mutual funds, annuities, etc) to later sell at a higher price for a profit.
In my opinion, there are three main things investors need to know about investing and getting in an investor’s mindset.
One, it’s a long-term plan. You’re in it for a while. Don’t go into it with the mindset that you’re going to 10x your money in a year. Generally speaking, that’s just not the case. Investors generally see the best returns on their investments over many years, even decades. Thinking long-term is the best way to not be too focused on what is happening in the short-term with your investments.
There are, of course, things you hear about like day trading, real estate, and penny stocks, that are all short term, high risk investments. And while some of these methods can make significant money, they may not be worth it in the long run for the general population.
Two, the sooner you start investing, the better. Because of a little thing called compound interest, the longer you can have your money invested, generally the better your outcome can be. In other words, you’re more likely to make more money over time if you start investing when you’re 20 instead of 30. But don’t let that stop you from investing! The best time to start investing is right now.
Three, stay invested to make money. I’m adding this one in here because too many people pull money out of their investments too early. I’m not going to sugar-coat it, it is a test of your mental fortitude to not try to “save” your money by pulling it out of your investments at the slightest sign of a dip. Remember: it’s a long-term strategy. Things will go down, and things will go up. It’s probably best not to look at them often!
Ultimately, investing is important because it can help build wealth over time. Money earns money which can lead to financial freedom. That means that money is not a barrier in the choices you want to make for yourself.
The true goal is to see your investments grow over time. And before you ask, yes, I think investors want to be still be investing money in their 401(k)s… but I don’t think they should stop there. Diversifying a strategy and investment portfolio into individual stocks can be a game-changing move that I think you’ll want to take advantage of now.
How To Make Money In The Stock Market
The Motley Fool Stock Advisor
The Motley Fool was founded by two brothers, Tom and David Gardner, in 1993 to help people invest better and gain financial freedom. Instead of providing the same investing recommendations that everyone else did, they took a different approach based on one philosophy: the individual investor can beat the market.
It’s based on a long-term strategy – you don’t have to have a lot of money or take on much risk to see returns potential that can make a difference in your life. Building wealth over time is an achievable goal. And as people in our twenties, we have a lot of time to watch our money grow!
If you want to get started with investing, The Motley Fool’s Stock Advisor subscription is an easy starting point for receiving expert knowledge on a monthly basis.
So… how does it work?
I’m glad you asked.
The Motley Fool Stock Advisor subscription is a monthly service that provides you with individual stock purchasing recommendations. These are curated by a team of experts using a proprietary method who are searching every area of the market for companies that they think are likely to grow.
They believe that the best chance to succeed in the stock market is to buy at least 25 stocks and hold them for at least five years.
The monthly service provides:
- monthly access to the top 2 stock recommendations from their award winning stock picking service
- a list of 10 best buys and a starter stock list from experts (so you can hit the ground running)
- a community with investing resources proven to enhance personal finance
- supplemental articles on major company changes
- sell recommendations as needed
- access to Stock Advisor Live
As a new customer, you can join for an introductory $99/year*.
If you’re unhappy with the service for any reason, you can get your membership-fee back within the first 30 days of your subscription.
As a Stock Advisor member, you’ll have unlimited access to their library of expert stock recommendations. Stock Advisor has outperformed the S&P 500 4-to-1 over the last 19 years — and that’s worth noting!
In the past, people used to turn to a financial advisor to manage their investment portfolios. Whether they were going with individual stocks, index funds, mutual funds – they put it all in the hand of someone else, for better or for worse. This type of service could cost thousands of dollars per year and not have nearly as high of a return as The Motley Fool has seen.
What Are My Next Steps To Start Investing in The Stock Market?
Sign up for a brokerage account.
After purchasing your Stock Advisor subscription and making the decision to invest in individual stocks, you’ll need to sign up for a brokerage account to manage your trades.
There are a few different options and factors that you’ll want to consider but The Motley Fool has put together a great, easy to digest comparison here so that you can pick what’s right for you. Their guide covers things like:
- Determining the type of brokerage account you think you’ll need
- Compare the costs and incentives of the types of brokerages
- Consider the services and conveniences offered that match your goals
This might seem like an overwhelming amount of information but don’t be put off! Chances are whatever you pick is going to be a fine choice as long as you take into account the three bullet points above.
Next, you’ll need to decide how much you’re going to invest starting now.
As a rule of thumb, you don’t want to invest any money that you’ll need to access in the next five years. Nothing in your emergency fund, anything you’re saving for a down payment, etc. Remember – it’s a long term plan.
I think its best to budget monthly an amount you are comfortable with to invest every month. For some people this might be $100 and for others it might be $2,000. No matter where you fall, you can use that money to invest in the stock picks from The Motley Fool Stock Advisor.
Look at the individual stock price each month and decide if that fits within your investment budget. You don’t need much money to get started. You don’t have to buy stocks at high prices either to see returns.
Picking the best stocks to invest in.
This is where The Motley Fool Stock Advisor comes in. They provide you with expert recommendations for what they believe are good stocks to buy. Trying to find good companies to invest in and deciding on stocks to buy right now can be overwhelming. Leave it to their analysts to give you recommendations for their top stocks to buy each month.
Stock market advice today can be confusing but it doesn’t have to be! And please don’t let that stop you from taking the steps to begin investing your money. It’s truly easier than ever to start investing.
As Warren Buffet said, “It is not necessary to do extraordinary things to get extraordinary results.” Pick a method and get started.
Buying stocks through your online brokerage account.
This step depends on what broker you went with but each platform should have easy to follow instructions built in to help you get started. Once you’re set up and do it once, it will be much easier going forward!
Over time, your stock portfolio might look different as your risk tolerance changes. Generally, the younger you are the more risk tolerance you might have within your asset allocation.
Finally, keep going.
After you buy a stock – it’s a set it and forget it – but keep going! The Motley Fool recommends holding a stock for at least five years. So after buying, might as well take a hands off approach for a while! But don’t stop investing.
Keep purchasing new stocks every month. Whether you go with recommendations from The Motley Fool Stock Advisor subscription or their starter stock list of safe stock investments, keep making investments going forward. You can pick small companies to invest in 2021 — don’t let the share price discourage you. This process isn’t about quick gains. It’s about a disciplined approach to reach your financial goals. And with enough time, you can do it too!
Many years in the future you might be able to sell stocks for profit. This is how its possible to grow wealth. Buy low, sell high many years later after stock has grown.
To be honest, the top five stocks to buy now are going to change depending what day you search on but what’s not going to change is how to potentially make money in the stock market. Plan to invest for the long-term. Don’t panic. And get started today.
I hope this post has clarified how to make money in the stock market and where to start right now. Join The Motley Fool’s Stock Advisor subscription here for an introductory $99 for new members* — just $1.90 a week — with a 30-day membership fee back guarantee if you’re unsatisfied for any reason.
Footnote: *Based on $199/year list price. Introductory promotion for new members only.