Before we dive in, let’s cover the basics of the stock market. When you buy stocks in a publicly traded company, you are actually buying a piece of the company. The stock market refers to both a virtual and physical place where people trade (buy/sell) stocks. Stocks are physically traded at the New York Stock Exchange (NYSE) and the Nasdaq in the famous Wall Street. Stocks are virtually traded using apps and online platforms like Robinhood, Ameritrade, eTrade, etc.
I’ve heard some of my friends say “I’m just gonna throw some money at the stock market…”, and I always tell them they are thinking about stocks wrong. Instead, buying stocks should be considered as an alternative to a savings account. The typical interest rate for savings accounts in most national banks is 0.01%, to put that into perspective if you have $1,000 in your savings account at the start of the year, you’d only see a $10 increase by years end. Whereas the annual average return in the stock market is 7%, so if you invested that same $1,000 in stocks, you can expect to see a $70 increase by years end.
Buying stocks without brokerage fees and commissions
In the past, investing in the stock market only made sense if you were playing with big bucks. This was due to the high brokerage fees and commissions that discouraged millennials from getting involved in the stock market. Today, there are several apps and online platforms like Robinhood that allow you to buy and sell stocks with no fees whatsoever. This has allowed millenials to get into the stock market with as little as $50 in their portfolio.
We believe that the financial system should work for the rest of us, not just the wealthy. – Vlad Tenev, Robinhood
3 stocks for beginners
My best advice to beginners in the stock market is to invest in companies in which you are a customer because you will understand the nature of the business and will likely be interested in major company news that could affect the stock prices. With that said, here are three of my favorite stocks worth looking into…
Netflix ($NFLX) – A fast growing tech stock that has seen a 93% growth in just 12 months.
Amazon ($AMZN) – A retail and internet giant lead by an ambitious CEO. The stock price has grown 77% in 12 months.
Sirius XM ($SIRI) – A steady growing stock with a huge upside for future growth. The stock price has increased by 31% in 12 months.
Drop a comment below if you have questions or if you’d like to share any tips