Investment
Strategies for Beginners
I just inherited some money and want to make an
investment in shares of stock. Do you have any advice for someone who has never
invested in the stock market?
Basically, the first thing to do would be to open a
brokerage account with a reputable stock broker. Depending on how you want to
go about your investment in shares, whether you want to do your own research,
or have your broker give you recommendations, will determine what kind of
brokerage account you would want to open.
A full service brokerage account generally charges
higher commissions but generally provides investors with the personal services
of a registered stock broker, licensed to give recommendations on stocks and
that conducts investment research for clients. Most full service stock brokerage
accounts generally require a larger minimum deposit than a discount brokerage
account.
A discount brokerage account, on the other hand,
has lower initial deposit requirements and charges the customer considerably
lower commissions, but does not provide clients with any research. Most
discount stock brokerages offer their customers a trading platform and on-line
in-house research which can be adequate for most investors.
One investment strategy when opening a full service
brokerage account — which is not generally available to customers of discount
brokerages — is the opportunity to subscribe to Initial Public Offerings of
previously private companies in the process of issuing stock to the public.
Getting in on the ground floor by investment in shares of a promising company
has made many millionaires out of regular investors.
A number of other strategies can be taken once the
trading account has been opened. If it is with a discount broker, you can then
research what type of stock you wish to purchase, many resources exist online.
If you have opened an account with a full service broker, ask about upcoming
IPOs and how your broker can add you to a subscription list as well as what
stocks are currently recommended by the brokerage.