Investing in Stocks for Beginners: Start Investing in 8 Simple Steps

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Welcome to stock investment for beginners!

For many people, the thought of investing for the first time is scary. After all, it seems like a complicated world with a lot of technical jargon and acronyms, all gate-kept by men in three-piece suits. But stock investing doesn’t have to be complicated or scary.

We’ve taught thousands of women+, many of whom once believed they could never invest, how to successfully build wealth through the stock market. Today, we’ll walk you through 8 easy steps to get started. You’ll discover how to build an investment portfolio that perfectly fits your life and financial situation, learn how to manage your own investments with confidence, and become your own best financial advisor.

How to Start Investing in Stocks for Beginners

Stock market investing for beginners doesn’t have to feel like a leap into the unknown. These simple steps have helped thousands of women+ build confidence, stop feeling overwhelmed, and set a solid foundation for long-term success in trading stocks. No financial background is required — all you need is a willingness to start investing!

1) Build a solid financial foundation

Remember those classes in college you can’t take until you’ve completed the pre-reqs?

Prerequisites create a solid foundation of knowledge so you can ace the harder classes.

Well, there are certain pre-reqs you need to complete before you start investing to successfully build wealth. And here at Dow Janes University, we’ve created our own catalog of everything you need to complete before you start investing. We call it our Wealth-Building Roadmap. Here’s how it breaks it down.

1. Spend less than you make every month:. This is the foundation of financial wellness. If you’re spending more than you make, then you’ll never get ahead financially.
2. Pay off high-interest rate debt:. This is any debt with an interest rate above 7%. On average, stocks have a growth rate of 8-10%. So if you have debt with an interest rate above that, you’ll never be able to make money on your investments because you’ll always owe more than you make.
3. Build an emergency fund:. This is to financially protect yourself in the event of an emergency. You don’t want to have to pull money from your investments —– and potentially lose money —– in case your car breaks down or you get laid off. If you don’t have an emergency fund, start by saving $1,000, then build up until you have enough to cover 3-6 months of expenses.
4. Save for retirement:. Saving for retirement is all about building up your savings so that once you stop earning income, you still have money to live off of. In this step, you want to max out your retirement accounts and put money away for future you.

Once you’ve finished those 4 steps, you’re ready to invest!

Learn how to build wealth with our full Wealth-Building Roadmap!

2) Choose how you want to invest

Stock market investing is more accessible now than ever before. Each of these investment options has a different level of involvement, cost, and control, so let's break them down to help you figure out which might work best for your situation.
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‍Hiring a Professional

This means working with a financial advisor who manages your investments for you. While this is the most hands-off option, it’s also the most expensive. Professional management can cost you hundreds of thousands of dollars over your lifetime, and they often aren’t going to do a better job than you could by just investing in index funds (which we’ll talk about later). Some fund managers also require at least $100,000 to get started, making this an option we wouldn’t recommend.

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Robo-Advisor

A robo-advisor is a digital platform that provides automated, algorithm-driven financial planning and investment services with little to no human supervision. When you invest with a Robo-Advisor, you share basic details about your age, financial goals, risk tolerance, and other preferences. Then, the platform gets to work investing in stocks on your behalf. The annual fee for a robo-advisor is typically about 0.25% of your assets (which, if you’re investing $1,000, is $2.50 per year).

Two things to note: if the robo-advisor charges a flat fee instead of a percentage, do the math! For example, if they charge $5 per month and you’re only investing $1,000, then you’re paying a 6% fee. There are plenty of companies that offer this service for 0.25%, so shop around and compare fees before you choose where to invest.

The upside of using a robo-advisor is that you don’t need to manage your investments yourself, and it’s a simple start-up process. The downside of using a robo-advisor is that you have no control over how your money is being invested. So if you care about values-aligned investing — like avoiding fossil fuels or tobacco companies — you likely won’t have enough able to control for this.

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Self-Manage

As the name suggests, this means managing your investments yourself. This may sound intimidating, especially to new investors, but it’s not as difficult as it seems. This is what we teach our members to do in the Million Dollar Year program.

Why do we do this if robo-advisors are so prevalent and simple to use? Because when you understand how to manage your money yourself, you get full control over your investments. We’ve seen how the confidence of women+ skyrockets when they learn how to manage their own investment portfolios, and that confidence extends far beyond money management.

And that’s our entire goal — to teach you how to take charge of your investment strategy so you can build both your portfolio and financial confidence.

3) Open an investment account

An investment account houses the money you use to invest. It’s like a savings account from which you can invest.

When you’re choosing between brokerage firms, there are a few things to keep in mind:

1. Good customer service: If you’re having trouble with your account, you want to be able to get a hold of someone who can help you fix it ASAP.
2. Low fees (also called “expense ratios”): Don’t pay more than .3% in fees for the funds you’re investing in.
3. Easy interface: The website should be easy to navigate and find what you need

If you’re investing in the US, some popular brokerages include:

• Vanguard
• Fidelity
• Charles Schwab
• E-Trade
• TD Ameritrade

If you’re located in Canada, you can open a standard brokerage account with Questrade or Vanguard Canada. In fact, we’ve made a comprehensive video on how to invest in Vanguard Canada, which you can watch below.

If you can’t decide on a brokerage, Vanguard and TD Ameritrade are both great options. If you want to invest in target date funds (which we’ll cover in a minute), then Vanguard has the lowest fees.

4) Transfer money into your account

Once you open your brokerage account, it’s time to fund the account by transferring money from your checking or savings account. All you have to do is log in online and search for an option to fund your account or transfer assets.

At this point, you’re probably wondering, "How much should I invest?”

The answer depends on your financial situation and how you plan to invest (which we’ll get to in a moment).

The short answer is that you can invest with as little as $100, but you’ll have more options if you start with $1,000.

That said, remember that the amount of money you invest isn’t as important as when you start investing. The sooner you start investing, the more money you make, even if you don’t invest much to start with.

5) Decide how much to invest in stocks vs. bonds

The technical investment term for this is “portfolio allocation” or “asset allocation.”

The percentage of stocks vs bonds you want to invest in will change depending on your age and/or time horizon.

Stock funds are considered a riskier investment but often offer higher returns, whereas bonds have a more guaranteed, but typically lower returns.

So, if you’re younger and have many years to go before you retire, you may want to invest more heavily in a stock portfolio, because you have time to ride the highs and lows of the market. But as you get closer to retirement age, you may want a higher percentage of your portfolio in bonds to give your investment portfolio more stability.

Here are a few more allocation tips for investing in stocks for beginners:

• If you’re investing for your kids’ college education, which is money you’ll need to use in about 10 years, then you may want to choose a more conservative allocation, like 70% stocks and 30% bonds.
• If you’re only investing for 5-7 years, you may opt for a diversified portfolio that’s 65% stocks and 35% bonds.
• If you’re investing for less than 5 years, don’t invest in stocks. Instead, keep your savings in a high-yield savings account or bonds.

Mastering the right mix of stocks and bonds early on is one of the most essential lessons for successful investors.

6) Choose your investments

Now that you’ve decided on your target portfolio allocation, it’s time to learn how to invest in stocks!

This may surprise you, but we don’t recommend investing in individual stocks. When you put your money into a single stock, you’re tying all of your money into the success of that company.

Instead, you can invest using target date funds, which are pre-formed funds with a mix of stocks and bonds based on your age that automatically adjust over time. This is the easiest way to get the percentage you want, and you can truly set it and forget it until retirement. However, this option gives you less over your investments with this option.

Alternatively, you can invest in exchange-traded funds (ETFs), which give you more control over your investments, but you need to take time to select the ETFs you want to invest in.

Because target date funds and ETFs are bundles of different stocks, they aren’t as risky as single stocks.

If you’re looking to build retirement savings through a target date fund, all you have to do is Google “target date fund” and the year you expect to retire. For instance, if you’re planning to retire in 2050, justy type in “target date 2050” and let Google work its magic. Just find a fund that doesn’t charge more than .15% in fees, make your investment, and rest easy knowing that the fund will allocate your investment accordingly.

You can also create a portfolio based on diverse ETFs. For example, let’s say you have $1,000 to invest. Maybe you invest $800 in a total stock market ETF like VTI, $100 in a total bond ETF like BND, and $100 in a gold share ETF like GLD.

If you want to learn more about how to pick ETFs and how to invest in ETFs, we’ve made videos on how to do that.

7) Invest Money

Once your investing account is open, funded, and you’ve settled on your stock portfolio, it’s time to place your first trade. This is where everything you’ve learned comes together and you begin activating your investment plan by putting your money to work! 

The process is simple:

1. Log in to your brokerage account.
2. Search for the stock funds or ETFs you’ve decided on.
3. Select the option to buy stocks, enter the dollar amount or number of shares you want, and hit confirm.

You don’t need to invest huge sums to begin, as just a few dollars will compound growth over time. The important part is to begin investing as soon as you’re ready, because the longer your money is in the market, the more you stand to make. 

When it comes to stocks and investing for beginners, avoid the temptation to “time the market.” Even investors who’ve been at it for years can’t consistently predict stock prices and changes in the short term. Instead, focus on putting money in regularly. 

Remember, it’s totally normal to feel some uncertainty at first. And while there’s no escaping the fact that investing involves risk, you can always adjust your stock investments, refine your financial goals, and explore other opportunities as you gain confidence. The most critical step is getting started.

8) Manage your investments

Managing investments is pretty easy. Here are our best tips for managing your investments:

• Buy and hold: Plan to hold onto your investments for at least five years, ideally longer.
• Don’t check your investments too often: The stock market is a roller coaster, and you don’t want to be tempted to sell when the market is low. Therefore, we don’t recommend checking your investments more than once a quarter.
• Leverage dollar-cost averaging (DCA): Continue to put more money into investing and set up auto-investing so this happens automatically each month. This strategy — known in financial terms as dollar-cost averaging — helps smooth out volatility, dilutes risk over time by investing at an average of highs and lows, and eliminates the pressure of guessing the right moment to buy.
• Rebalance your portfolio: Rebalance your portfolio each year if you invested in ETFs. Use the 130 rule to make sure you’re invested in the ideal percentage of stocks and bonds for your age. Buy or sell as necessary to achieve your target allocation.

Learning about investing in stocks for beginners gets easier when you have the right guidance and support. You now have the foundation to start building wealth through the stock market with confidence.

Common Mistakes to Avoid in Beginner Stock Investing

It helps to be aware of the most common mistakes when you first start investing in stocks. For beginners, these are the main pitfalls to watch out for:

• Checking your investments too often: Constant monitoring can lead to emotional investment decisions that ultimately carry more risk. 
• Panic-selling during market dips: The stock market works in cycles. It’s better to ride out the lows and come out ahead in the long run than lock in losses by selling when the market is down.
• Putting too much into one company or stock: Concentrating on a single investment adds risk, so it’s better to spread your money across a variety of stock and bond funds. 
• Not reviewing and rebalancing your portfolio: Even the best stocks are prone to significant shifts over time. Rebalancing helps maintain the right risk level for your investment goals.
• Delaying investing while waiting for the “perfect time”: There’s no magic moment to buy stocks. Starting early is key to growing your assets and getting the best return on your investment over the long term. 
• Ignoring fees or taxes: Always know what you’re paying and why. It’s all too easy to let high fees, account minimums, taxes, and other unexpected charges eat into your dividend payments.
• Not knowing your risk tolerance or timeline: Understanding how much risk you can handle and when you’ll need the money (i.e., a retirement plan vs. covering your child’s education) helps guide your investment decisions.
• Comparing yourself to others: Everyone’s financial situation and saving goals are different. So, comparing your share prices or average annual return to someone else’s is rarely helpful and could even derail your confidence.

Small, consistent steps matter more than perfection. The most important thing is to have faith in your investing plan and stay focused on your long-term goals.

Unlock the secrets to stock investing for beginners with Dow Janes

Learn more about how to make money from investments when you heck out our free masterclass, Think Like an Investor! In it, we will give you the need-to-know secrets of winning investment strategy —– and how to avoid the investment mistake that cost Laurie-Anne $15,000.

Above all, the most important thing is to start as early as possible. So, if you need to, scroll back up and follow every step to start building a life of financial security and abundance today.

Check out more investment strategies for beginners!

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FAQ: How to Invest in Stocks for Beginners

We hope you’ve found this beginner’s guide to investing in stocks helpful. When you're just starting out, it's completely normal to have questions. Here are some of the most common ones we hear from our community.

What are the different types of stocks?

The main types of stocks include common stocks, preferred stocks, growth stocks, value stocks, and blue-chip stocks. Each offers different benefits:

• Common stocks: Give voting rights and potential dividends
• Preferred stocks: Offer fixed dividends with priority over common stockholders
• Growth stocks: Focus on companies expected to grow faster than average
• Value stocks: Trade below their perceived worth, offering potential bargains
• Blue-chip stocks: Established companies with stable earnings and dividends

How do beginners start buying stocks?

Beginners start buying stocks by opening a brokerage account and transferring money into it. From there, you can choose stocks or diversified funds.

Can I make $1000 a month in the stock market?

Making $1,000 monthly from stocks is possible but typically requires significant capital and portfolio size. Most strategies for investing in stocks for beginners focus on long-term growth rather than monthly income targets.

Is $100 enough to start investing in stocks?

Yes, $100 is enough to start investing in stocks, especially if you go with investment products like low-cost ETFs or fractional shares. Starting with any amount is better than waiting, and you can add more over time.

What is the 7% rule in stocks?

The 7% rule in stocks advises selling a stock if it drops 7% or more from your purchase price. This strategy aims to limit losses on particular investments, and prevent your working capital from dropping significantly.