The Investing 101 Series is BACK!! I received a call from Shannon wanting to know how to buy her first shares of stock. I asked Tela Holcomb, a stocks and options trader, to join me and give her tips for how a beginner can purchase their first few shares of stock.
This episode is part of the Investing 101 Series.
If you are a beginner and have never purchased a stock or other investment product before, the first thing that you are going to need to do is open a brokerage account.
What is a Brokerage Account?
A brokerage account is where you can deposit cash in order to purchase stocks and other investment products. The stocks that you purchase will also be held within this account.
Where Can I Open a Brokerage Account?
There are a ton of places that offer brokerage accounts. It’s all about finding the one that fits you best. Tela recommends trying out a couple to see which one you like similarly to how you would shop around and compare checking accounts.
I found a great list of stock brokers in an article titled Best Online Stock Brokers for Beginners 2018 by Dayana Yochim with NerdWallet.com. Dayana mentions ETrade, Charles Schwab and Fidelity to name a few. These are just suggestions. Remember to always choose what’s best for you and your needs.
Online Apps for Buying Stocks
If you are looking for the ability to easily buy and sell stocks directly from your phone, then Tela recommends checking out Stockpile. What makes this app unique is the ability to buy fractional shares of stock.
This means that no matter how expensive the stock is you can buy as little as $1 at a time. This allows you to purchase stocks such as Google and Amazon even if you don’t have enough to buy a full share. Do note that there is a $0.99 per trade fee.
Another app that we mentioned in this episode is Robinhood. This app doesn’t allow you to buy fractional shares like Stockpile, but it does allow you to buy and sell stocks for free. Robinhood makes its money by lending out the cash that users leave in their accounts, similarly to what banks.
They do also charge for additional services such as allowing users to buy on margin (Buying on margin is essentially buying stocks with a loan issued by the broker – not recommended for beginners).
Identify Your Investing Goals
Tela advises individuals that are new to investing to identify their goals before making any decisions. Are you looking to hold on to the stocks that you purchase for a few days or a few years? Do you want the most advanced charts and statistics available?
How you answer these questions will help you better understand your needs and this information will in turn help you to find the brokerage account that is best for you.
Remember, Investing Does Come with Risks
Although investing in stocks is very enticing due to the potential for large gains, the opportunity for great returns almost always comes with the risk of losing money. Stocks by nature can gain and lose value quickly, so please take the time to do your homework and really understand what you are putting your money in to before ever making a trade.
Meet Today’s Guest – Tela Holcomb
Tela is a stocks and options trader, investor and serial entrepreneur. She is on a mission to teach other women how to trade the stock market so they can break free of their 9 to 5, create a monthly income and build a financial legacy.
Tela does this through her various online training courses including her free 7 Day foundations course which you can find using the link below.
Find out more about Tela on her blog TelaHolcomb.com or on any of the social media platforms below.