Make 2019 the Year to Start Investing in Stocks and Index Funds

Jeremy Biberdorf  |

Written by Jeremy Biberdorf

Understanding the stock market is like understanding calculus for some – either you get it, or you don’t. There is that grey area where some of it starts to make sense, but you’re still left wondering if your answer is correct.

For those of you who made 2019 the year that you’ll start investing, but you have no idea where to begin, this is for you. Learning about the stock market shouldn’t be rocket science. It may possess some challenging moments, but that doesn’t mean you stop right there. There are many blogs out there that have advice for beginner investors to get the ball rolling.

As the title would suggest, we’re looking at stocks and index funds, and why they should be a part of your 2019 investment strategy. First, though, you need to understand what they are before you can decide if you invest in stocks or index funds, or maybe both.

The Basics of Stocks

If you’re looking at stocks, those are the shares of a public corporation that someone owns. The owner of the company will sell shares of his or her company to stockholders to bring in additional funds, usually to grow the company. Once you own those stocks, you can sell them on the stock market.

Once you have your investment (your stock), you watch the stock market to see how it performs. If the market does well, and the numbers are high, you can watch your investment grow. However, if the market does poorly and you see lower numbers than what you bought your stock for, that won’t be good for you and the company.

The Basics of Index Funds

Index funds can get more complicated than the basics of stocks. Before anything, you should know what a mutual fund is. A mutual fund can be compared to when a group of investors pool money together provided by individuals. The mutual funds are invested in things like stocks and bonds. The S&P 500 or the Dow Jones are two of the most common mutual funds out there.

An index fund is like an extension of the mutual fund. A particular index fund kind of mirrors the actual stock. So, it closely follows along with how the market performs. Although it’s not guaranteed, there’s a good chance that however the index performs, the index fund will mimic its performance.

There’s the question of stocks vs index funds investing and which is better. It’s not necessarily that one is better than the other. They both serve a purpose in helping you make money. A good portfolio will have a variety of stocks and index funds within.

Should I Invest?

The million dollar question – should I invest? While it comes down to what you want and what your risk tolerance level is, investing is a good idea.

If you have cash sitting on your nightstand, nothing will happen to it (besides the temptation to spend it). However, if you took that cash and put it into an investment, you’ll be able to watch that money grow into more cash, assuming that your investment is successful.

There are many stock market investing pros and cons to consider before you make your decision. For starters, we know that investing can make you money, sometimes a lot of money. On the flip side though, we know that investing can lose you money, and sometimes a lot of money.

Luckily, though, there are multiple ways to earn money with your investment. A strong portfolio is one that utilizes as many of these tools as possible. Plus, when you enter the investment world, you’re never alone. There are many out there ready to offer their help, whether it be online or in person.

There is a downside to investing. The stock market is volatile, and you can never truly predict how it will perform. That means you could wake up one day and see that the market crashed, and you’ve lost everything. Since you get to set your risk tolerance though, you’ll decide how much you are ready to lose if that happened.

DISCLOSURE: N/A


The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.


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