How To Invest In U.S. Stock Market
If you are thinking of investing in the US stock market, then you are not alone. There are many people who want to invest but do not do so because they are unsure of the returns, they are afraid to take the risk, they do not want to lose their hard earned money and so on. However, if you ask any successful investor, the answer would be, you need to take risks. The rule for them is, ‘no risks means no returns’. You can however invest with minimum risk in the initial stages.
photo/Gerd Altmann
Investing in the US stock market is easy; all you need to do is to open a brokerage account. There are too many brokerage companies in the market nowadays and finding one that is good is the toughest of all. Most of the brokerage firms have started offering deals such as commission free trading for a stipulated time etc. There are many websites that have reviewed these brokerage firms. You can read the brokerage review and then decide. Usually there is a time gap for your account to get approved, so you need to apply soon if you want to start investing in a few days.
Once your brokerage account is funded and ready you can start the investing process. Though there are many individual shares that you can buy, for a beginner, the ideal start would be to invest in ETF’s or Exchange Traded Funds. Exchange Traded Funds are the safest bet for the initial investor.
If you feel you are ready to take risks, then you should invest in small cap stocks. Small cap stocks are the ones that will usually give you good returns but you need to do your due diligence before you invest in any of them. Small cap stocks have potential to give high returns but the research you undertake is more important. You need to find out if the company is making profits, if the sector is growing, what the pitfalls for growth are and so on. Once you have identified a stock you can invest in it and wait for the windfall returns. You should also be checking on the stock periodically to see if it is on the right path.
If you want to play a little safe and if you want to get good dividend payments then you should opt for large cap stocks. These are the established companies that have been giving decent returns for years. Even then you should do your research and then decide on investing.
Last but not the least you can invest in penny stocks. Most new investors tend to navigate here and invest. Though you may get super high returns if the stock does well, you should know that they are available for pennies for a reason. For a small amount you can hold a lot of shares but if the company fails your money also goes down the drain.
Overall, investing is easy, but the difficult part is research, put in your time and effort and you will be successful.
Author: Pankaj Deb
