Investing can be a great step towards financial independence, as well as being fun and exciting, but sometimes, getting started can be a little intimidating. At Nemo Money, we have put together a thorough guide for beginners that can guide you through everything you need to know about investing.
Beginner investor’s checklist
1. Define Your Why 🧐
Why do you want to start investing - are you saving for a particular goal like retirement or buying property? Or are you more interested in learning about the stock market and earning extra income on the side? Dividends paid by stocks are a great way to generate passive income to achieve financial freedom.
2. Set Your Budget 💸
How much money do you want to invest? It’s totally up to you. It’s a common myth when it comes to investing that you need to put lots of money into your investments. Firstly, different investments will have different prices.
With the handy fractional share feature on the Nemo Money trading app, you can buy as big or small a slice of your favourite companies as you want. You should never invest more than you can afford to lose, as returns are never guaranteed.
You can also use the Nemo Money Investment Calculator feature on our app to work out how much money you might make based on a specific investment amount.
3. Educate Yourself 📚
Learn stock market basics online - try podcasts and YouTube, or beginner-friendly books. There’s also the ‘Learn with Nemo’ section on our app, where we have shared short, easy-to-understand videos that give you a super quick intro to investing and the stock market.
Learn what to look for when assessing a stock’s performance, to help you pick the best stocks. Earnings reports are a great way to see how well a company is doing according to key metrics like quarterly revenue and expenses.
4. Understand Risk vs. Reward ⚖️
Everyone has different levels of ‘risk tolerance’ - deciding what level of risk you are comfortable with will help you decide what types of investments are right for you. Higher risk investments, like particularly volatile stocks that show a lot of movement, can be exciting and can offer higher rewards. But more stable investments, while potentially offering a lower payout, might help protect you from losses. Bear in mind that investing always carries a level of risk.
5. Start With ETFs If You Prefer 🛒
These might be the easiest ways to get involved in investing. ETFs are baskets that track the performance of multiple different companies at once, meaning that your investments are already diversified straight away, spreading out the level of risk you are exposed to. One of the most popular ETFs for beginner investors is the S&P 500, which tracks the performance of the 500 largest US companies.
However, if you want to jump straight into investing in individual stocks, buying stocks in your favourite companies, there’s no reason you can’t do that, especially when you can use fractional shares to make a smaller investment.
6. Choose the Right Trading Platform 📱
There are a whole host of different ways to invest. Different trading platforms will have their own policies and fees might vary. Our investment app Nemo Money is commission-free, meaning that you get to keep more of your profits. You’ll also ideally be looking for a platform that’s easy to use, and has a high level of security to protect your data - as well as keeping your funds separate from that of the company. These are all things we’re proud to say you get when you use Nemo Money!
7. Practice Patience 🐢
While you will sometimes see big movements in stock prices in a matter of weeks - or even days! - the most significant profits might be made from longer term investments. People often say investing is a marathon, not a sprint. The longer you hold a stock for, the more you’ll benefit from the company’s growth - and the more dividend payouts you’ll get paid, too!
8. Ignore the Noise 🙉
Don’t get thrown off track by every piece of news and every analyst prediction - stick to your guns and your personal investment goals. For instance, just because a stock in an industry you don’t follow is popping today doesn’t mean you need to sell your shares in your favourite company or industry and grab this instead. Equally, if you were planning to hold a stock long term based on predictions that it might grow in value, it might be a shame to sell as soon as you hear the slightest inkling of the price dropping.
9. Track Your Progress 📊
Periodically check your investments to see what’s working. You can decide how often feels right for you, but many people prefer to review their portfolio on a monthly basis, others quarterly. Of course you can check in on your stocks’ performance more often if you find tracking it closely fun and interesting, but some people find that checking their stocks too often stresses them out, so bear this in mind.
10. Keep Learning and Evolving 🌱
Stay curious and keep on learning about the stock market, the industries you’re most interested in, and the investments you have in your portfolio (or might like to add to it one day). You might find that over time your goals and priorities shift, or find that you want to explore other opportunities like CFD trading or crypto. Nemo Money has these opportunities on our trading app, too!
Final thoughts
Here is one last tip from us at Nemo Money about how to get the most out of investing as a beginner.
It’s always good to diversify your investments, however you choose to do this - whether that’s by handpicking a variety of stocks across different industries and based in different countries, or by investing in an ETF that tracks a number of different stocks’ performance. This means that if one stock is performing poorly, another might be able to pick up the slack. It can’t be said often enough: don’t put all your eggs in one basket!
If you’re looking to start your investment journey, Nemo Money has a great offer for new investors. Download our trading app today and top up your account. We’ll give you an extra 50% on top of what you top up your account with, up to a maximum bonus of $50.
Terms and conditions apply.
