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The Badger Herald

Independent Student Newspaper Since 1969

The Badger Herald

Independent Student Newspaper Since 1969

The Badger Herald

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Investing made easy: Your amateur guide to the stock market

Start investing with these tips and tricks to navigate the stock market
Investing+made+easy%3A+Your+amateur+guide+to+the+stock+market
Mary Magnuson

I’m not a financial advisor or a business major, and I just got a credit card last week. I didn’t know much about stocks until last Christmas when my dad gave me some money to invest.

I don’t have a lot of experience, but I’ve found some success in the market and built a stable investment portfolio out of what I learned. If recent news has made you consider the stock market, here’s some advice — not from a bank, hedge fund or subscription website, but someone like you who took the next step.

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While it recently came to the public’s attention in a Reddit thread, stock trading has been around since the early 16th century. The U.S. market, or the New York Stock Exchange, began in 1792 and eventually dominated the global market. The idea of investing among everyday people is a growing trend on social media, and it’s no longer seen as “reserved” for the rich.

The pandemic has pulled more people into the market, as well as the news with Reddit last January with Gamestop and other companies. Even TikTok has exploded with “StockTok” content, where creators discuss investing opportunities for ordinary people.

If you’re one of these “ordinary people,” i.e. not the mega rich, the first thing to figure out is what type of investor you want to be. You could buy stocks based on value, which are from popular, established companies, or growth, which are startups or “penny stocks” that seem to have great potential for success. 

You could also go with certain tactics based on perceived bear or bull markets. Bear markets tend to have declining values of stocks, while bull markets are on the rise and more favorable for profit. You can learn to garner wealth by playing both of these scenarios, but to do that, you need to find the investing app that best suits your needs.

There are many great apps, but we’ll focus on options more affordable for the amateur investor. Most are free to sign up and will either charge a small percentage per action or profit, though apps like Robinhood claim they don’t charge, they still do

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While Vanguard and Charles Schwab are excellent apps, they have recurring fees that may not be ideal for those just starting out. Ameritrade, Fidelity and thinkorswim are free but have higher broker-assisted trade fees. This brings us to Robinhood.

Robinhood has been under fire for blocking buys of Gamestop and other dying stocks listed by the Reddit thread, r/WallStreetBets. If you want to learn more about the scandal, read this Vox article. But among this and other things, Robinhood hasn’t gotten the best coverage.

Even in the wake of their controversy, I still believe Robinhood is one of the best tools to start investing. Not only is it the most affordable option but it teaches you about the stock market as you invest.

It’s a simple-to-use app with a plethora of vocab and definitions for newbies. It walks you through tools like dividend investments, options trading and the many conditional orders you can make on stocks.

Familiarize yourself with market orders, limit orders and stop orders for both buying and selling. You can play around with the different conditional orders, and Robinhood offers the best definitions for each tool.

You can also try your hand at cryptocurrencies, though Robinhood isn’t the best way to do it. For this, I’d recommend a month of Robinhood and then downloading a service that specializes in crypto like Coinbase.

Regardless of what you choose, it’s a good idea to start with a $50 to $100 deposit. You can buy whole stocks or fractions, but regardless of the amount you pay for, pay attention to the percentage growth or decline — these will help you determine how much you’re making off the initial investment.

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With that in mind, here are six key tips to start out.

Tip #1: Start in popular companies and pot stocks

It’s a great idea to start with companies you’re familiar with. Buying stocks from historically successful companies gives you a better chance to make a profit. If you’re looking for growth investing, start with marijuana stocks. The end of prohibition is on the horizon, and these are the stocks that are most likely to experience exponential growth.

Tip #2: Pay attention to current events 

Stock trends are based on, well, real life trends. If you haven’t before, pay attention to what’s going on around you. Whether in business, news or pop culture, a broad awareness will help you immensely in buying or selling stock.

Tip #3: Be cautious of trends

Likewise, with anything online, you need to fact check what you find. “StockTok” may have good information, but you have to pick it through the junk. Remember your money is what’s at stake, so you might as well do some research.

Tip #4: Understand volatility

Volatility is the ability of the market to be unpredictable, to sway up and down with no steady pattern. Some stocks are more volatile than others, and it’s your job to figure this out among your assets. Watch for patterns and play them to the best of your ability.

Tip #5: Recognize the long-term

With the last tip, it’s important to remember when stocks go down, they’ll go back up. One of the best bits of advice I’ve learned is to treat down days as “discount days” because prices are lower and will most likely rise. And if you’re losing money, assess the situation. If the stock has a history of swinging back up, stay in the market. 

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The average annual trend is an 8% increase, so you’ll most likely profit if you’re smart and remain. Few people get rich in short-term investing, and the key to the market is staying in long-term.

Tip #6: Start small, learn while you invest

The trick is to not get too excited when the market swings up or down. Be smart and remember that you’re new to this — right now, it’s a learning experience. To ensure you don’t lose part of your investment, start in increments and increase from there.

The world of investing has opened the doors for new wealth. It may take longer than you expect, but it’s still a good way to prepare for the future and start growing your assets.

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