When I first started to invest, I invested in mutual funds. When I invested, buying stocks on your phone was not available. You could think I’m a dinosaur since some people only know how to invest with their smartphone or online. I actually had to mail my money to invest.
Over the past few years, I slowly moved my investments from mutual funds to stocks. Mutual funds are easy for someone who is inexperienced and doesn’t want to pick individual stocks. Exchange Traded Funds or ETFs may be another option to consider since they are similar to mutual funds but their fees are normally a little lower.
Mutual funds charge an annual fee. Since I don’t trade my funds very often, I thought I could invest on my own and avoid the annual fees. Now that most brokerage accounts allow you to trade with $0 commission, this allowed me to keep even more money.
Most of my stocks are dividend stocks with a few growth stocks. The dividend stocks make up the majority of my holdings.
A few years ago, I thought the market was due for a correction. So I slowly transitioned to dividend stocks from growth stocks. With dividend stocks, companies pay the investors based on the amount they hold. Dividends can pay you a percentage every month, quarterly, annually, or whatever date they select.
For my dividend stocks, I reinvest the dividends. When this happens, you get more shares of the stock. Your dividend stocks grow without you adding any additional money. I honestly haven’t a lot of money to my stock portfolio in years. In a little bit, I’ll explain why.
How you can get started. If you want to invest in stocks, mutual funds, or ETFs, invest in money that you have available. Do not invest with money you need to pay to keep a roof over your head, food, or everyday necessities. Your investing money should be another pot of money not tied to anything.
Pick an investment sector or stock (s) you are comfortable with. Some popular investments are the S&P 500 which tracks the stock market. For individual stocks, technology stocks did well in 2020 and will likely continue. These stocks include Apple, Amazon, Google, or Microsoft. Of course, I encourage you to do your own research on the investment.