No way. As I've found out during my first year of investing, the market can be volatile, but there's a silver lining to market downturns: If you've been curious about investing to shore up your financial wellness, you can get started now at bargain prices. And you don't need to have a degree in finance to do it, either; I learned the basics through a beginner course from In Luz We Trust, and the process of investing has helped me understand even more. Here are five lessons I've learned since investing that first dollar.
5 lessons I learned from investing in stocks
1. You don’t need a lot of money to start investing
Before I bought my first shares of stock, I believed that people needed thousands of dollars to buy into the stock market. Not true—most online brokerages have no minimum initial deposit, so you can open an account with low amounts.
I also thought that you had to save up enough money to buy a full share, but you don't. As long as your brokerage service provides it (and these days, most do), you can invest in fractional shares. According to personal finance expert Paco De Leon, author of Finance for the People, purchasing fractional shares is a good strategy for people who are eyeing stocks that are outside of their maximum budget. Let’s say your budget allows for you to invest $25 a month, but you’re looking at a $500 share. “You can just take that $25 and buy a fraction of a share, which allows you to slowly buy into the stock over time,” De Leon says.
Fractional shares are a smart option if you're eyeing companies that are otherwise out of reach for your investment dollars. “You can be an Apple investor with however [much] a month,” says stock market expert and founder of In Luz We Trust Linda García. "If the stock goes up 15 percent for the year, your fraction of your share is also going to go up 15%. You'll get to benefit from the full percentage that it went up."
2. Anyone can open a brokerage account—not just financial pros
Thinking that only finance pros can open a brokerage account—which allows you to buy and sell shares in the stock market—is rooted in how things were done in the past, says De Leon. “For many, many years, Wall Street and [stock] investing was a walled garden,” she says. “We just need to become aware of the fact that things have changed, that there are these platforms where now we can go in and we don't need to know ‘a guy’ to help us invest.”
Brokerage accounts are more accessible now, thanks to digital platforms that make investing easier—again, often with no minimum deposit. Personally, I use E-Trade because I’ve found that it’s the easiest to use and interpret. You might also consider Fidelity, Charles Schwab, or Robinhood, depending on what’s right for your situation.
3. It’s crucial to be introspective about your stock market investments, especially if you have money wounds
Many folks grow up with “money wounds,” or trauma surrounding finances, says García. This trauma surrounding money can come from your childhood relationship with finances, how people in your life might negatively think about money, and limiting beliefs about acquiring wealth. And for folks with money wounds, it's especially important to be aware of them so they don't compromise your mobility in being able to invest in the stock market.
My siblings and I were taught to hold on to money instead of letting it go.
For example, I was raised in a working class household where money was tight. My siblings and I were taught to hold on to money instead of letting it go, even when the latter could make you more money through investing. While I'm still mindful of saving, I had to work to unlearn some of these beliefs in order to feel comfortable in investing.
“Investing is really scary," says García. "Not learning to lean on ourselves and develop our own expertise can be really dangerous." Introspective and mindful stock market investing takes time and education, so carve some out to learn about a company before deploying your hard-earned cash. You might also want to consider how can invest according to your personal values; for instance, if you don't want to funnel money to oil and gas companies, Fossil Free Funds can help you find mutual funds (aka groups of stocks) that stay away from fossil fuel investments.
4. Consistent investing pays off
The most lucrative opportunity to invest in the stock market is when a stock is low, but it's more important to be consistent than to time the market perfectly. Personally, I do what's called dollar-cost averaging—the practice of investing the same dollar amount on a regular basis, regardless of a stock's share price. This was a hard lesson for me to learn, as I still struggle to consistently transfer funds from my bank account to my investment account. But experts say it's the smart move. "One thing everybody [in finance] agrees on is the concept of dollar cost averaging,” says De Leon. “I decide I'm going to put in a hundred dollars each paycheck into a brokerage account, no matter what the market is doing.”
The reason you want to be consistent as opposed to waiting to invest when a stock is low, say De Leon and García, is because it’s basically impossible to time the stock market—meaning, you won’t know for sure when it’ll be doing well and when it won’t be. It's more important to steadily invest the amount you can comfortably afford. In the long run, investments pay off.
5. The market goes up and down—and that's normal
Since taking the In Luz We Trust course, I’ve purchased stock in Target, Apple, and AirBnB, to name a few. As the market has shifted, I’ve been through a roller coaster of emotions. One day my investments will be doing really well, and the next day, maybe not so much.
One day my investments will be doing really well, and the next day, maybe not so much.
The nature of the market is to go up and down—it's just the way it works. Understanding that reminds me that bad days are an opportunity to invest more in the companies I believe in. A company is “not going anywhere just because their stock is down,” says García. “It doesn't mean the company's going to disappear. It's important to stay level headed in that way. The sky is not falling and the world is not ending. These times are what teach us [which investments] we have conviction in.”
Obviously, I don't love losing money. (Who does?) But I don't treat my investment account like a savings account, so I don't need that cash right now. Sure, I might lose money temporarily, but in the long run, I'm confident that I'll see a return on my investment in the years to come. This isn't a get-rich-quick scheme, after all. It's what's working for me—and I'm in it for the long haul.
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