First Post: How To Invest In the Stock Market

I thought the first entry to this blog should be the question I get asked the most (although running in close second is “how do I find the next Microsoft?”)

And that is, “how do I start investing?”

Outside of mutual funds at work through the 401k plan, investing seems to intimidate the vast majority of people. It really shouldn’t be that way. Investing should be fun.

It also doesn’t take a lot of money to start doing it. You don’t need $5000 sitting around to invest. Heck, you don’t need any start-up money. Can you spare $50 or $100 a month? Then you can start investing.

There is no time like the present. Last Thanksgiving, several of my family members were asking me, “how do I start investing?”. I can guarantee you that this Thanksgiving they will be asking the me the same thing again. In the meantime, they could have squirreled away $600 or $1200.

Does that sound paltry to you? I know. It seems like nothing. But it accumulates faster than you think if you do it every month. And here’s the secret forumla:

1. Go to sharebuilder’s website (link is on this blog.) I’ve used sharebuilder for 5 years myself. If I can figure it out, anyone can.

2. Follow their instructions to sign up for an account. It takes maybe 10 minutes.

Voila! You’re investing.

What is sharebuilder? Sharebuilder is a service that allows you to buy stocks or ETFs (exchange traded funds) for as little as $25, or $50 or $100 a month. Whatever amount you choose. For $4 you can buy one stock a month or you can choose from several of their “plans” if you think you’re going to buy several stocks a month.

Sure, some financial advisors will tell you that you’re paying a 4% fee to invest (if you just do $100 a month) which is true and that is a lot. But how I look at it is, it’s a latte or a People Magazine at the check-out counter and at least you’re starting to invest.

So, once you sign up for your account, you can tell them to buy $100 of XYZ company on the third Tuesday of month. (Every trade is done on a Tuesday. You can designate which Tuesday of the month you want.) The day before, if the banks are open, they will go directly into your bank account and take out the $100. On that Tuesday at 10 am, they will buy $100 worth of the stock for you. It may be 1.5 shares. It may be .63 of a share. (With sharebuilder, you can buy partial shares.)

You won’t get a say in what the price of the stock is when you buy it because it buys it automatically on the third Tuesday of the month (or whichever Tuesday you designate.)

Now- the harder question is- what do I invest in? I tell investors just beginning to invest to buy what they know. So, if you go to Starbucks 5 times a week, why not become an owner? Are you tired of paying high gas prices at the pump? Why not benefit by buying some gasoline company stock?

I recommend investors start with decent sized companies with good “brands.” You know which ones those are. Coke. Bud. Starbucks. McDonalds. GE. Johnson & Johnson. Wal-Mart. Buy something you’ll feel proud in owning. You can figure out the buy/sell/ups/downs of it as you go along.

The important thing is that you just start. Because I guarantee that once you do, and you see how much fun it is to see the account growing slowly, you’ll want to do and learn more about investing.

You’re not always going to see big gains. You may see some losses. But the point is that you’re adding a little bit of money every month.

Trust me.

Go to Sharebuilder and start today.