Getting Started with Buy and Hold Investing

How can I get started? What you Need to Know!

The question I am asked the most is, “How can I get started?” The short answer is, “Open a trading account, deposit some money, and start trading.” However, before diving in, there are some crucial steps to take to ensure you build a solid foundation for your investment journey. Getting Started in your investment journey is key, just take the step to start learning about socks and the market will get you hooked on growing your money!

Getting Started Step 1: Educate Yourself and Track Your Wishlist

Before making any investment decisions, I suggest creating an account using a free service like Seeking Alpha. This platform allows you to track your wishlist without actually buying any stock. By doing this, you can test market strategies, develop rules, and make mistakes without risking your money.

Using your Seeking Alpha account for at least a few months will help you familiarize yourself with how the stock market works. One of the great tools Seeking Alpha offers is the historical prices link. This feature provides insights into a stock’s performance and the dividends it pays throughout its lifespan. By analyzing historical data, you can learn to stay calm during market fluctuations and develop the patience necessary for a successful buy and hold strategy.

Getting Started Step 2: Develop Your Investment Rules

Investing in the stock market without a plan is like walking onto a car lot without knowing what you need. Before investing, decide on your risk tolerance and target markets. An excellent exercise is to look around your house at the products you frequently use, research who makes them, and investigate those companies’ viability.

Here are three examples of companies I found using this exercise:

• Microsoft Corporation (MSFT)
  • Market Cap: $2.1 trillion
  • Price to Earnings Ratio: 36.45
  • Earnings Per Share: 9.39
• Apple Inc. (AAPL)
  • Market Cap: $2.5 trillion
  • Price to Earnings Ratio: 29.74
  • Earnings Per Share: 6.00
• Visa Inc. (V)
  • Market Cap: $520 billion
  • Price to Earnings Ratio: 40.23
  • Earnings Per Share: 7.20

I’m not recommending these stocks specifically but showing you what to look for in a strong company. Researching these companies will give you a good starting point.

Getting Started Step 3: Choose the Right Brokerage Account

Speak with your bank about the options they provide for stock buying. Look for a self-directed account that allows you to buy stocks online without assistance. Be mindful of the fees, as some banks charge high fees for trades while others are more affordable. Doing a little research now can save you a lot of money when you’re ready to start investing.

Getting Started Step 4: Start Small and Build Gradually

Once you have defined your rules for buying stocks and feel comfortable with the Seeking Alpha tool, it’s time to create your account and start small. Begin with an amount you are comfortable investing, such as $1,000, and gradually increase your investment as you gain more confidence and experience. Investing can become addictive, so ensure you maintain a balance and only invest money you can afford to set aside.

Additional Advice for New Investors

Understand What You’re Investing In

Only invest in things you understand and can reason out the value. Avoid jumping into investments based on tips from friends, coworkers, social media influencers, or emails. Always do your own research and ensure you have a clear understanding of why you are investing in a particular stock.

Create Rules to Avoid FOMO

The fear of missing out (FOMO) can lead to impulsive decisions. Establish rules to guide your investment choices, such as setting a maximum amount you’re willing to invest in a single stock or deciding on criteria for when to buy or sell.

Diversify Your Portfolio

Diversification is key to managing risk. Spread your investments across different sectors and industries to minimize the impact of a poor-performing stock on your overall portfolio.

Monitor Your Investments Regularly

Keep an eye on your investments, but don’t panic over short-term market fluctuations. Regularly reviewing your portfolio helps you stay informed about your investments and make adjustments as needed.

Be Patient and Stay Disciplined

Investing in the stock market is a long-term game. Stay disciplined, stick to your investment plan, and be patient. Remember, successful investing requires time and consistency.

Getting Started Sooner, Rather than Later

Getting started with buy and hold investing involves more than just opening a trading account and depositing money. It’s about educating yourself, developing a solid investment plan, choosing the right brokerage, and starting small. By following these steps, you’ll build a strong foundation for a successful investment journey.

Invest wisely, stay informed, and most importantly, enjoy the process.

Happy Investing!