12 Things You Need to Know Before Investing in Stocks

is it a good idea to invest in stocks

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A few days ago, our family was driving to a school event together. I realized that the conversation we had would actually make for a pretty good article, one that I would have found incredibly valuable a few years ago when we were first learning about investing. News about the stock market shows up on practically every news report you hear on the radio or on television. However, just because the newspaper and the financial media talk nonstop about stock investing doesn’t mean it’s the only way to invest your money. Once the money’s there, you can then ask the brokerage to buy a certain amount of whatever stock you want. For example, you might want to buy $100 worth of Coca-Cola stock. You can submit more complex requests, too; for example, you might have an order to buy 50 shares of Coca-Cola stock when it dips below $40 per share. In either case, the brokerage will charge you a small fee for each transaction. If each one costs you $10, that’s $200 in fees. If you then need to sell all of those stocks, you’re going to have to execute twenty “sell” orders. For each share of stock that you own in that company, the company will pay you some small amount – usually less than a dollar – on a regular basis, typically every quarter. So, let’s say you bought shares in a company where the shares are $20 each. You invest $1,000 (and pay all fees yourself), so you own 50 shares. Avoid making the mistakes described in these five verbal blunders and you'll be on the right path to higher returns. If your money returned 10% a year (the S&P 500's historical average), two grand would be worth $34,898.80 after 30 years. Bianca baby-sits a lot and spends most of her spare time reading. She saves $1,000 a year starting when she's 15 and invests it in the stock market for 10 years earning 12% per year on average. At age 40 Patrice gets a wake-up call when her parents retire on nothing but Social Security. She starts vigorously socking away $10,000 every year for the next 25 years.