Getting Experience

One of the most intimidating part about investing in the stock market is the unknown. Without any pervious experience in investing it’s quite overwhelming for someone to throw their hard earned money at something they do not fully understand. So how can we overcome this lack of confidence and experience? Stock Market Simulators.

Last semester I joined into the Messiah Colleges Stock Market Games through a website called investopedia. If you have never heard of them I strongly suggest you check them out. They are a great resource for investing, but furthermore they have a stock market simulator. The simulator copies exactly what the actual market is doing, but instead of using your own money to invest, you use virtual dollars. Simply put, everything is the same as it would be trading with a company like e-trade. There is commission fees, you have the ability to put stops and limits on trade, and you can even sell and buy stock options. If you are fearful about investing and are looking to get your feet wet, I couldn’t think of a better way to do it. Before I started playing around in the simulator I was investing in big companies, mutual funds, and ETF’s. Anything safe, and they I knew wouldn’t be high risk. But as the saying goes, “No risk, No reward.” This couldn’t be more true. My first week of “risky” investing I made over $200. The next week, I lost almost $250. This was mainly because I got cocky, I was over confidant in my abilities and did’t do thorough research on the companies I was investing with. Never the less, stock market simulators are an excellent way to get some experience with investing, and gain some confidence and skills.  It could also be a great place to learn about new parts of the stock market like stock options, which is what I am currently doing. This gives me real world experience without the financial hardship of my mistakes.

I hope this blog post was informative, and helpful to all of you. Please check out investopia’s stock market simulator, and if you have any questions or comments please feel free to ask! Until next week, happy investing!

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Risk, and How to Manage It.

Risk is something that every investor has to consider. Every time you put money into the market there is always the possibility you won’t get some of it back, or potentially all of it back. On the other side of that coin you could get all of it back and much more. One of my friends asked me this week how I know I will make money in the market. When I replied with, “I don’t” this only further confused her. She asked, “Well then why put money in?” I attempted to answer her question by opening my Robinhood app and explaining why I invested in XYZ company, how long I’ve been invested and what to look for when investing.

What do I look for and how do I avoid risk? There is not sure fire ways to avoid risk, but there are plenty of ways to reduce it. When I want to invest in a single stock I do my homework. I look at all the ratios I have available to me. I research company price chart history. Lastly, l look for any resent news stories about the company. Using all of these things if everything checks out and my gut agrees, I make an investment. Something I think is important to note is that just because you find one or two things you are uncertain about in a company, I would not write them off as a bad investment. I have had many investments where there were plenty of warning signs in a company, but they still made for a great investment. NVidia for example, has been all over the place in the resent months. By studying their charts long enough I was able to see a pattern in their stock price, and I played that to my advantage by investing for short periods of time when I thought the stock would be going up. Once I saw signs of the stock price peaking, I sold my shares.

If you are just starting out, or lack confidence in your investing abilities a great option for you would be to diversify in many large stable companies (Apple, Google, etc.). This will provide stability as well as teach you the fundamentals of investing. Another great option is to invest in an ETF. ETF’s are a great way to get your feet wet in the world of investing. They are a stable option, put together by experienced individuals. Another benefit of ETF’s is that they are generally low cost shares. So if you’re looking to invest but don’t have a lot of money to do so, this is a great option.

I hope this was helpful for you and gave you some clarity about risk and how to handle it in your own investing endeavors. Until next time! Thanks for reading.

Who to Invest Through!

My recommendations on the three most popular e-brokers.

One of the biggest struggles I faced when I started investing was choosing which brokerage firm to invest with. The good news is there are plenty of options. First, you have many factors to consider. First, what sort of investing to you want to do. Are you looking to just put some money into a safe mutual fund or ETF (Exchange Traded Fund), or do you want more control to invest in any stock you so choose. Second, how about fees? What are you willing to pay? There are many investing applications that only charge a monthly fee, or a very low per-trade charge. To help you decide who you want to invest your money through I have created a list of the top three investing apps along with the pros and cons to each one.

etrade

First up, ETrade. ETrade is one of the most popular investment companies today. Etrade’s most attractive feature is that it allows you to invest with any publicly traded company. Another benefit of using ETrade is that there are multiple charts and ratios you can use to make wise investing decisions. One of ETrade’s draw backs is the fees, each trade is $9.99. Compared to other e-brokers this is a fairly high trade rate.

robinhood

Next, is an investing app called Robinhood. The great thing about Robinhood is there are ZERO fees! However, there are limited trading options and the app is only accessible on a mobile device. Here is Business Insiders review/take on Robinhood.

stash

The last App is Stash. This is another investing application. However, they have take a lot of the scary and challenging aspect of investing. What they have done is composed a variety of ETF’s to choose from. They give a description of what each ETF includes, and its risk level. There are fees for this app however. If your account is less that $5000 there is a $1 a month charge. If your account is more than $5000 you will be charged a .25% annual fee.

I hope my first blog was informative, and helpful. If you have any questions or comment please do not hesitate to directly contact me, or leave a comment below! Until next time!