Dear DTA,
My immediate goal is to simply learn the “hows” of stock trading beginning, with whatever step #1 is. I read something about how you have to have a portfolio account first to be able to buy/sell/trade. Can I learn to do what’s needed without paying an investment broker big bucks, who’s not “invested” in my success as I am? Obviously, I know nothing about this business. But I am especially interested in penny stocks – for starters anyway. Any hints you can give me would be appreciated.
-Ronda T.
Thanks for writing in, Ronda. We’re here to help, inspire, and inform readers, so I think you’ve come to the right place.
First, you’re correct about needing to have an account opened in order to buy stocks.
That’s actually the easiest part of investing, as there are a number of discount brokerages that allow you to open up accounts online. This means you never even have to leave your house. Plus, they often require no initial deposit, meaning an account can often be opened with no initial money/capital investment.
[ad#Google Adsense 336×280-IA]It used to be (going back about 20 or so years) really difficult to open a brokerage account. And you had to call in orders and pay quite a bit of money per trade.
But I believe we’re now in a “golden era” of investing, as everything can be done for very little (or no) cost online.
You’ll simply want to do some research on the various stock brokerages to see which one works best for you and your needs.
One thing I like to look for is a brokerage with a branch near where I live.
Call me old-fashioned, but I like to know that I can walk into a building and actually talk to someone about my money, if need be.
The Internet has made not only stock buying/selling far easier and cheaper than ever before, but it’s also made researching investments much easier and faster than ever before.
Consider this site, Daily Trade Alert, for example.
You have a treasure trove of information on stocks, for free!
And, of course, we’re doing what we can to reach out to readers directly, like we’re doing right now.
In addition, you can go to a publicly traded company’s website and pull up annual reports and various financial statements… instantly. I mean, it’s incredible.
So you can indeed learn to do what’s necessary without paying anyone for the privilege.
However, that means the onus is on you to educate yourself with the appropriate knowledge regarding investing, financial statements, valuation, etc.
But fear not, for we’re here to help!
To that end, I always recommend dividend growth investing as the most viable long-term investment strategy out there.
I personally used this investment strategy to go frombelow broke in my late 20s to essentially financially independent in my early 30s, building a real-life, real-money six-figure portfolio that’s chock-full of high-quality dividend growth stocks.
This portfolio, by the way, generates five-figure dividend income for me.
This dividend income is completely passive, meaning I collect the money no matter what I do.
Work. Don’t work. Get up early. Sleep in. Whatever. The money rolls in regardless.
Dividend growth investing means you buy stock in great businesses that directly reward their shareholders with some of the growing profit these companies generate.
The dividends are basically just a portion of profit. And if you own a slice of a company (as you would if you bought stock in a publicly traded company), you have a right to that profit.
Well, if the profit is growing (as it should if the company is operating at a high level), so should your share of that profit.
That’s the basis for dividend growth investing.
It’s extremely intuitive.
What’s truly fantastic about dividend growth investing is that you can build outsized wealth and income.
Buying stocks that pay and grow dividends has been shown to be a strategy that outperforms the broader market over longer periods of time.
Plus, most high-quality dividend growth stocks offer higher yields (more income) than the broader market.
So you’re getting more wealth and more income.
You get to have your cake and eat it, too!
Another great thing about this strategy is that it doesn’t consume much time.
The dividends come in without me having to lift a finger, for one.
But the other part of the investment strategy – buying and holding stocks for years on end – borders on lethargy.
In fact, there are many stocks in my personal portfolio that I’ve owned since I started investing back in 2010. So we’re talking about seven years here.
I buy. I hold. I collect. Very straightforward.
And like I mentioned earlier, we’re here to help.
For instance, I write a weekly series that highlights an undervalued dividend growth stock each Sunday.
This means I’m doing the research and providing actionable advice for readers.
Now, I can’t recommend specific stocks for people. And you should be taking the time to educate yourself on investing.
But there’s so much (free!) content out there designed to help people like yourself, Ronda.
Another example of fantastic content available right here on the site is fellow contributor Dave Van Knapp’s dividend growth investing lessons, which reads almost like a book – going over much of what dividend growth investing is all about from start to finish.
So I encourage you to start reading and educating yourself.
There’s really no reason to not start today.
I personally used dividend growth investing to go from broke to retired in my early 30s. So I can’t recommend the strategy enough.
And I’m not selling anything here. I’m only aiming to help people like yourself.
You can instead choose to go after penny stocks, as you mentioned in your question. Likewise, you could buy lottery tickets or go to the casino.
Maybe you’ll make money. Or maybe you’ll lose money.
But why gamble with penny stocks when you could instead invest in wonderful businesses that sell products and/or services to people all over the world, and share their growing profit with you directly?
The choice is yours.
But I think you’ll see that it’s an easy decision once you look at both options thoroughly.
I wish you luck and success.
Jason Fieber
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Disclaimer: Jason Fieber is not a licensed financial advisor, tax professional, or stock broker. Please consult with a licensed investment professional before investing any of your money. If your money is not FDIC insured, it may decline in value. To protect the privacy of our readers, any names published in this article are under aliases. In addition, text may be edited, omitted or paraphrased for grammar or length.