How to Start Investing

So you’ve decided to start investing.

It’s now time for you to decide between opening a brokerage account or a Roth IRA (or both).  Which you choose depends on your financial goals, timeline, and circumstances.  Here’s a breakdown to help you understand which option might be best for you:

Choose a Roth IRA if…

your primary goal is saving for retirement and you’re comfortable with the contribution limits and withdrawal rules.  With a Roth IRA, your investments grow tax-free. This means you won’t owe any taxes on your investment gains when you withdraw them in retirement.

Choose a Brokerage Account if…

you have short-term financial goals (such as saving for a car or a down payment on a house) or if you want more flexibility with your investments.  Gains from investments held in a brokerage account are subject to capital gains tax when you sell them. 

Gather Required Documents

You’ll typically need to provide personal information such as your name, address, Social Security number (or tax identification number), and employment information.  Have these documents ready before you start the account application process.

Complete the Application

Visit the brokerage firm’s website or contact them directly to start the application process.  Fill out the required forms online or submit paper forms if necessary.  Make sure to review the terms and conditions carefully.

Fund Your Account

Once your account is approved, you’ll need to fund it before you can start buying stocks.  You can transfer money from your bank account (savings and/ or checking) to your brokerage account electronically or by mailing a check.

Research Stocks

Before you start buying stocks, take the time to research and understand the companies you’re interested in investing in.  Consider factors such as their business model, financial health, industry trends, and growth potential.

Place Your Trades

Once your account is funded and you’ve done your research, you can place buy or sell orders for stocks through your brokerage platform.  Choose the stocks you want to buy, enter the number of shares you’d like to purchase, and set the price you’re willing to pay.

Monitor Your Investments

Keep an eye on your investments regularly to track their performance and make any necessary adjustments to your portfolio.  Remember that investing in the stock market involves risks, so it’s essential to stay informed and be prepared to ride out market fluctuations.

Remember, investing in the stock market carries risks, and it’s essential to do thorough research and understand the potential risks and rewards before buying or selling stocks.  If you’re unsure about any part of the process, consider seeking guidance from a trusted friend or family member.