Now that you are getting a strong working knowledge the investing and trading basics, you are probably wondering… what do I do next? Let’s look at how you act on this new investing information.
How Much Can You Invest?
Step one is to how much money you can afford to invest each month. This decision is a personal decision that you must make based on income, monthly expenses (rent/mortgage, food, transportation, health expenditures, etc.), and the length of time you are willing to have your money invested. To gain some clarity on your budget feel free to check out some of the free resources we detailed in this post on budgeting, saving, and beginning investing.
We also recommend you spend at least 20 minutes running scenarios through our Wealth Calculator. This tool is an invaluable resource in helping you understand how much money you may need to invest each month to reach your long term investing goals such as a wedding, a home, saving for your child’s education, and your own retirement goals. Run the numbers, test out different scenarios, and then look closely at how you can effectively trim down your budget and add funds to your long-term investing goals.
Line Up Your Funnel for Stock Research
Once you have a strong understanding of your budget and how much you want to invest monthly, it is time that you make a second choice – where do you want to apply your new found understanding in stocks? Our own Market Power Indicator is one option for learning the ropes and monitoring your stocks — it’s an application that helps you simplify the stock market. Our application will help you understand how a stock’s and industry safety score affect when you should buy/hold/sell a stock you may have invested in or showed an interest. MPI is a tool to help you complete your stock research – whether that is 1-minute each day or an hour each day, it is important you find a place to complete your stock transactions once you have decided what you would like to buy or sell.
But where do you find the stocks you should monitor? Besides our undervalued and recommended stocks in the MPI app, there are a lot of other areas to keep updated on stock news.
- Barron’s is a fantastic place to start your research — simply subscribing and reading the headlines will deepen your understand of the market and nuances.
- Seeking Alpha allows you to set up alerts on specific stocks.
Consider a Broker or Stock Trading App
Barron’s puts out an annual list of the Best Brokers. This report analyzes eight different factors. While Baron’s final rating are important, as a new investor you shouldn’t necessarily go with the top broker. At Stocks for the Week, we recommend that you look at the a few key areas and choose a broker off this list that meets your own personal needs. Some key items you may want to pay extra attention to as a new investor may include:
- Customer service and education – Education and support that can supplement the information provided by MPI
- Mobile – You can flip from the MPI mobile platform directly into buying or selling your selected stock
- Trading experience and technology – This section is where you might be one that you might want to read into more specifically for each brokerage. For example, TradeStation is a top ranked firm and allows for some very unique customization for each individual. The customization for each trader does require said trader to have a moderate understanding of programming to set-up and maintain his/her preferences. Interactive Brokers has a many complex features that allow the investors to make very advanced exchanges and modeling. If those features do not interest you or seem too advanced for you in your current trading stage, these companies might not be the best fit for you right now.
- Cost – This will be a tricky one to analyze because generally brokerages that have more handholding and support for new investors have a higher cost point. This cost is driven by the face that new investors generally trade fewer shares and need more support per share sold.
And if you’re keen to trade stocks independently and online based off your research and personal investing goals, these sites may get you started. Your mileage with them may vary, so do some research and decide which you think is the best fit for your situation.
- Robinhood: A very newcomer to the industry but with some serious potential. This is a slick app with zero-commission trading and instant trading access via mobile. It’s definitely a company to watch out for and we are all about lowering the costs to trade, so they could be an ideal option for newer investors.
- TD Ameritrade
Still confused? This review from Nerd Wallet does a great job comparing the three major options. Weigh this with the commentary from Barron’s Brokerage review and you should be on track to make a decision that fits your personal investing situation.
And if you’re unsure of the commission structure used by brokerages, we have you covered: Understanding Fees and Commissions When Investing in the Stock Market.
Use Your Watchlists
Once you have analyzed your budget and selected your brokerage – it’s time to review and update your watchlists!
If you haven’t yet tested out the MPI dashboard, login now and create your first watchlist to discover how easy it is to track and monitor your stocks. Create a watchlist for “Stock I own,” a second watchlist for “Stocks I want to own,” and a third for “MPI suggested stocks to research.” Continue to use your Watchlist(s) to ensure that you continue to monitor your new investments and get started.
Then continue researching, monitoring stocks, and apply the knowledge you have gained with your research with the MPI tool to determine the sectors where you would like to invest, and the transactions you are ready to make.