I Started Investing In Stocks Over A Year Ago; Here Are 6 Tips For People Who Don't Know Where To Begin

Don't invest money you're going to need soon.

Investing in stocks can sound like a terrifying game of "Am I About To Lose All My Money Today?!"

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It's especially daunting if you don't come from a financial background, don't have an inner circle of people knowledgable on the topic, and don't know WHAT THE HECK all those weird terms mean. Understandable. But because of this, so many people prevent themselves from potentially building their wealth in the long run.

Many people don't know where to start or don't realize it's not as scary as it seems. I didn't study finance in college, and no one in my family knew enough about investing to explain it to me. Yet, a year ago, I opened up a Robinhood account and invested my first $20.

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I know, I know. You're probably tired of hearing from rich peeps who tout investing as "tHe bEsT tHiNg tO dO fOr YoUr fInAnCeS." It's one thing you can do for your finances — there are other routes to wealth. And I'm not here to convince you that stocks are your only hope for making money.

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Who I am: An average Jane with a natural interest in finance and a passion for helping people thrive. I want to maximize my money and proactively work toward building generational wealth. I, like you, have heard a ton about investing in stocks over the years. Some of what I heard was inspiring, some was a little off-putting. I just casually bought stock shares, played it safe, and have seen an overall 14% portfolio growth since.

Who I am not: A billionaire. A millionaire. Rich. A financial advisor. A psychic who can predict which stocks to buy and which stocks to sell. A lucky individual who made millions in a decade. Another investment snob who's going to make you feel bad for not already owning Apple shares.

But I think it would be pretty rad if I could make you feel even a smidge more knowledgeable (and comfortable) about investing — even if you don't actually go buy stocks after reading this post.

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And BTW, this post is NOT intended to teach you any investing strategies or any methods for picking successful stocks. But IT IS intended to ease you into the idea of investing and provide a way of thinking that may make you feel more comfortable overall.

So here's my advice for people who just still aren't sold on this whole investing thing:

1. Don't invest money you're going to need soon.

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The stock market has its ups and downs — that is to be expected. Therefore, it's unrealistic to assume that you're going to earn huge profits in a short period of time. Start investing with the idea that you're putting your money away for five to 10 years. Don't invest money that you'll need to use for a down payment on a house in six months. Or, money you're supposed to use for rent in two months. It's too risky because if you sell your stock shares for less than you bought them, you'll lose money.

Instead, start investing with a small amount, and put money you'll need to access into your savings.

2. Don't purchase a stock just because someone else tells you to.

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Do your own research about a company and decide for yourself if you want to invest in it. Your peer's talk about the company that's going to become "the next Facebook" may be tantalizing, but don't blindly follow their advice.

Here's what those people won't tell you: everyone has a different level of risk tolerance. Some people are more willing than others to take a short-term hit. One person's stock recommendation may be perfect for their portfolio, but too risky for yours. At the same time, be open-minded about learning from other peoples' experiences.

It's up to you to inform yourself about what you're putting your money into. When researching a company, read up on recent news about it and make sure you know who its customers are. A good rule of thumb is: don't buy a stock in a company if you can't explain what exactly that company does.

I also subscribe to newsletters like Robinhood Snacks and The Hustle, which send me daily articles on the market and updates on specific companies. This way, I can keep up with what the companies on my watch list are doing as well as learn about what new companies have in the works.

3. Think about how a company or service will impact society in the future.

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The present is kind of like your context clues for the future. Pay attention to the industries people are talking about and the services that are impacting everyone's lives. Also, consider the areas society wants to improve in (sustainability, for example).

One of the best ways to stay informed is to — you guessed it — read the news. You can also pick the brains of your friends and family members. Their expertise in a specific field could give you some valuable insight.

4. Make investing more fun by curating a portfolio that's reflective of your personal interests and values.

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Channeling your passions through your portfolio is just a strategy for helping you feel less intimidated by investing. A good jumping off point is to invest in companies that align with your personal interests and values. If you're passionate about leading a healthy lifestyle, try looking into fitness companies, health brands, apparel brands, pharmaceutical companies, or health technology. Or perhaps you loooove home and interior design and want your portfolio to reflect that. Check out real estate firms, home goods brands, and architecture companies.

Diversification is a safe approach to make sure you don't put all your eggs in one basket (i.e. only investing in travel brands or only investing in energy companies). So, do some research into how the things you're passionate about have been making waves in different sectors.

5. Don't try to figure out the best times to sell your shares as a beginner. Buy 'em and hold 'em for a long time to give them a chance to grow.

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Wayyyyy too many investing newbies get caught up in the tiny worries — the small potatoes — when it comes to buying stocks. They check Robinhood or WeBull 30 times a day to see if their shares are on the rise yet. They freak out when the stock they just bought drops by a few cents. They consider selling as soon as the stock makes a couple of bucks. The people who do this will STRESS. YOU. OUT. They may unintentionally make you feel like you aren't moving fast enough and like you're missing out on an opportunity every day.

Yes, there have been some bumps along the road (I'm looking at you, 2008 and 2020) but that's to be expected. Besides, just look at how industries roared back to life in the decade after 2008! The market is very emotionally driven and has its high points and low points. But over time, the market generally trends upward. This is why holding your investments long-term is a fruitful strategy. Whether you buy just two shares of an impactful company at $100 or $101, you'll still likely see gains in 5, 10, and 15 years and beyond. It's not worth tearing your hair out over these small potatoes.

6. Think of investing as a way of saving for the future rather than as spending money for right now.

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This is a psychological trick that I use on myself whenever I feel like not adding money to the stock market for a month or two and instead bulking up a lower-return savings account. Even though the money is leaving my account to "buy" a share of a company, I look at it as adding to the nest egg that I'm building up. A simple change in the way I word an action is enough to trigger a different type of understanding. It also helps to budget a specified amount to put toward stocks each month.

Hopefully I've now transformed you into a ~savvy~, confident, and curious first-time investor.

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If this sounds like music to your ears (and bank account), check out more of our personal finance posts.

But before you go!!! What are some myths about investing that you've heard? Comment them below! Your input may be featured in an upcoming post.