How to Become a Stock Investor

by Bonnie Conrad ; Updated July 27, 2017

Items you will need

  • Mutual fund prospectus
  • Mutual fund application
  • 401k application

The stock market can be a good place to invest your money, but you should do your homework before putting your hard-earned cash at risk. Reviewing your stock market options and choosing the ones that best meet your needs is one of the best ways to get started. Chances are you have a number of ways to invest in the stock market, from your 401k plan at work to individual stocks and mutual funds.

Step 1

Contact your employer and review the stock market investments you have at work. If you work for a for profit company, you might have access to a 401k plan that can be invested in the stock market. Employees of public institutions can invest in a 403b plan. In addition, some companies sponsor employee stock purchase plans that allow workers to purchase company stock through payroll deductions.

Step 2

Contact several online brokerage firms if you want to invest in individual stocks. The price of trades at online brokers like E*Trade, TD Ameritrade and Scottrade can be less than $10 each.

Step 3

Review the requirements for an online brokerage account and make sure you meet them. Each broker will have different minimum balance requirements, and if you do not meet the minimum requirements you might be subject to maintenance charges and other fees.

Step 4

Contact several mutual fund companies and request a prospectus for their managed and index funds. A study of mutual funds reported in Money Magazine found that most managed funds fail to outperform the index over the long-term, so choosing an index fund can be a good move.

Step 5

Complete the application for the online brokerage firm or mutual fund you wish to use, then submit the completed form and your initial deposit to the address listed on the form. Keep in mind that some firms use a separate address for regular and overnight mail, so be sure to send the application to the right address.

Tips

  • Keep copies of all your paperwork with your tax records. You will need this documentation to compute your capital gains when you sell your stocks or mutual funds.

About the Author

Based in Pennsylvania, Bonnie Conrad has been working as a professional freelance writer since 2003. Her work can be seen on Credit Factor, Constant Content and a number of other websites. Conrad also works full-time as a computer technician and loves to write about a number of technician topics. She studied computer technology and business administration at Harrisburg Area Community College.