If you have never invested money and you do not know how to start, there is no reason to feel intimidated.
It is actually very easy, but there are several steps to make sure things go smoothly.
The first step is to search online for “discount broker”.
There is a long list of companies that include Vanguard, Schwab, ThinkorSwim, TradeKing, Fidelity and Scottrade.
Any of these well-known companies is good for beginners.
Steps to Follow
1. Select an investment company. Then look to see how much the company charges to invest in mutual funds. If a company offers its own fund, there should be no charge to invest in that particular fund. Fidelity, for example, will not charge if you put your money in a Fidelity fund, nor does Vanguard charge to invest in its fund. Some companies, also, do not charge for ETFs.
2. Ask about the minimum investment required by the company. For investors who enroll in their automatic transfer program, some companies waive the initial minimum investment.
3. Look at checking and saving account options and decide which account will be used for the investment money.
4. One option is to set up automatic transfers and have a designated amount transferred from the bank account directly to the investment company at regular intervals.
5. Another alternative is to send a check or manually transfer money from the bank directly to the investment account. This method is less reliable because it requires more discipline, and it is easy to FORGET, STOP, or AVOID. Automatic transfers are a much better way to invest. You will, also, become wealthier with this strategy.
6. Forms for all of these transactions can be found on the website of the company, or they can be obtained from a company representative.
7. For each fund, be sure to list the percentage of of money deposited on the automatic transfer form or investment deposit form. For example, 65% to stocks, 15% to bonds, and 20% to market cash fund.
When you make automated transfers, you are increasing your chances of reaching your goals.
A good way to make sure the money is available to invest is to have it transferred immediately after receiving a pay check.
This will ensure there is money available and that it goes directly into the investment account.