Making your first stock market investment can be daunting. Nerves and fear of risk held me back for a long time. I spent countless hours researching, trying to find the lowest-risk options. Deciding where to start felt overwhelming.
Then, I stumbled upon a podcast featuring JL Collins. He discussed his book The Simple Path to Wealth, and it gave me the confidence to dive into index funds. The diversified options felt like a more secure and promising long-term strategy.
Here’s how I took the leap—and the steps I followed—to make my first personal investment into FSPGX. These steps might help you gain the confidence you need to start investing, too.
Step 1: Set Your Investment Goals
How long do you want to hold your investment? What’s the purpose of your investment?
These questions will guide the type of investment you choose, whether it’s for retirement, a child’s future, or personal financial growth. Knowing your goals helps narrow down your options and keeps you focused.
Step 2: Research What You Believe In
Look into trends and companies you already spend money on. Understand the company’s financial history, growth potential, future plans, partnerships, and leadership. Ensure the investment aligns with your values and what you believe will grow your money.
Step 3: Pay Attention to Expense Ratios
If you’re selecting a mutual fund or exchange-traded fund (ETF), review the expense ratio. This is the annual cost to cover fund operating expenses, such as administration and portfolio management.
The lower the expense ratio, the less you pay in fees. For example, my expense ratio for FSPGX is 0.04%, meaning I pay $0.35 per $1,000 invested. Choose an expense ratio that you’re comfortable with.
Step 4: Choose the Right Brokerage Firm
Find a brokerage firm with a user-friendly app that simplifies tracking and managing your investments. If you plan to make multiple investments (e.g., personal, retirement, or 529 plans), ensure the brokerage offers these options.
For me, Fidelity was the best choice because of its easy-to-use app and wide range of investment offerings. Popular alternatives include Vanguard and Charles Schwab.
Step 5: Accept the Risks
Investing in the stock market comes with risks. Only invest what you’re comfortable losing. If it’s not a one-time investment, set up recurring contributions that fit your budget. This approach helps build discipline and reduces stress about market fluctuations.
Final Thoughts
These five steps helped me overcome the anxiety of making my first stock market investment. They gave me the confidence to trust my decision, knowing my money will compound over time.
If you’re just starting, take a deep breath. Trust your research, make a plan, and remember: your future self will thank you for taking this step toward financial growth.
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This was helpful since I'm looking to start investing and I consider myself a beginner. Any other resources besides the podcast that you think might be helpful?