How to Invest in Stocks: A Comprehensive Guide

For those with even modest savings, preserving and growing them is a priority. One excellent way to do so is by investing in stocks. However, navigating this realm can be daunting for beginners. Let’s delve into how to invest in stocks, the amount of money needed, and the risks awaiting novices.

Understanding How to Invest in Stocks and How It Works

Stocks represent ownership in a company, and if the company grows, the value of the stock rises. You can sell it for a profit or hold onto it for dividends, offering the potential for passive income. But knowing how to invest in stocks correctly is crucial, as a decrease in their value can lead to losses.

Typically, newcomers to the stock market are unsure of where to buy stocks. Stocks aren’t sold in stores; they’re traded on stock exchanges. However, purchasing them isn’t as straightforward as it may seem. You’ll need a intermediary, such as a broker, bank, or investment firm. 

Getting Started with Investing in Stocks

Before making your first stock purchase, you need to take several steps:

1. Consider your objectives – whether you seek earnings, money preservation, or simply want to understand how to invest in stocks.
2. Determine the amount you’re willing to invest in stocks. You can start small, but brokers often have minimum account opening requirements. For instance, Interactive Brokers has no minimum account opening balance, while Svit Invest requires 50,000 hryvnias.
3. Decide whether you have enough time to manage your investments independently. You may require the services of an investment advisor or fund.
4. Determine the time horizon for your investments – whether it’s months, years, or decades.
5. Decide whether you need stocks for dividends or for selling when their value appreciates.
6. Assess your risk tolerance and plan for potential losses. Stocks can both appreciate and depreciate, so plan your strategy accordingly.

These steps collectively help you choose the right stocks for your portfolio. In broad strokes:

• For preserving wealth and ensuring long-term profit, invest in stable, long-standing companies.
• For quick gains, invest in promising young companies that could skyrocket instantly, but remember they could also plummet.

How to Invest in Stocks: Understanding the Technicalities

So, you’ve chosen a broker and stocks. Now, you need to take three more steps:

1. Open a brokerage account that allows asset trading.
2. Fund your account. Brokers usually provide straightforward instructions on how to do this. While transferring money to foreign brokers was easy via SWIFT in the past, options for private individuals are limited during times of war. Hence, alternatives like Wise or Zen are utilized.
3. Purchase assets. Finally, you can select your desired stocks and place a purchase order. The transaction will be executed within seconds.

Once you’ve learned how to invest in stocks and even made your purchases, it’s time for monitoring and waiting:

• Keep a cool head.
• Stick to your strategy.
• Avoid succumbing to panic.

How to Invest in Stocks in 2024 – Video

To gain a better understanding of how to invest in stocks specifically in Ukraine, watch this video: 

Also read our article – What Is CPI vs. Inflation Meaning – The CPI Formula.

Conclusions

Buying stocks is one of the simplest investments available to beginners. However, even if you know how to invest in stocks, selecting the right strategy – whether long-term or short-term, aiming for dividends or not – is crucial. With the correct approach, even beginners can invest wisely.

FAQ About How to Invest in Stocks