“What is the first step to getting “set up” to trade/invest? Can you recommend a particular company for beginners? Are these dumb questions? Any advice would be greatly appreciated.”
Thanks so much for writing in, Tammy. There are no dumb questions. In fact, your questions are great.
We’re here to provide actionable information to readers, which is what we’re doing today.
There are so many readers out there like yourself that aren’t sure where to start. We want to change that by having an honest and direct conversation. So we’re taking the time to respond to questions like this one.[ad#Google Adsense 336×280-IA]The first step to getting “set up” to trade/invest is opening a brokerage account.
Good news: it’s never been easier or cheaper to do this, and there have never been so many options.
Bad news: too many options can make things confusing.
However, it’s pretty easy to cut through the fog and get right to the point.
There are really only a few major brokerages out there, all of which have been keeping investors’ money safe for many years.
Although there are newer players that have online-only operations, promising nearly-free or free trades, you have to be careful about entrusting your hard-earned capital with some new company that hasn’t been around the block.
So I like to work with major brokerages like Fidelity, Scottrade, and Charles Schwab.
In fact, it’s with major brokerages like these that I’ve entrusted my own hard-earned capital – capital which has turned into a six-figure stock portfolio that generates five-figure passive income on my behalf.
Believe me, I don’t trust just any company with my money.
You can open an account with any of these companies very easily, completely online. You can transfer over money from your bank account quickly, once set up. And it’s only a few dollars per trade.
Compared to the $50+/trade you would have spent back in the 80s, investors today are very fortunate.
“Setting up” is the easy part, though. The hard part is actually all the saving and investing necessary to put the future you in a wonderful position in life.
I know firsthand.
It wasn’t that long ago that I was completely broke. Actually, I was below broke. I had less money/assets than debt/liabilities. My net worth was below zero. I realized at 27 years old, in late 2009, that babies were worth more than I was.
Almost $20,000 in the hole, I had to start digging my way out.
So I worked incredibly hard at my job, saved every penny I possibly could, started a second job/career (via writing), and intelligently invested my excess capital.
All of this resulted in financial independence just a few years later, at age 33.
I recount how all of this happened via my “blueprint” to early retirement, which is a road map that just about anyone can follow.
That includes you, Tammy.
This “blueprint” involved a lot of investing in high-quality dividend growth stocks, like those you’ll find on David Fish’s Dividend Champions, Contenders, and Challengers list.
I decided on dividend growth investing as the strategy that would get me out of my hole and eventually lead to me to financial independence at an early age.
The reasons why are pretty straightforward.
Dividend growth investing simply involves investing in high-quality companies that have such an outstanding track record of increasing their profit, they’re able to share that growing profit directly with shareholders in the form of growing dividends.
Indeed, dividends are the “proof in the profit pudding”.
They keep a company honest. Dividends are real cash flow, paid out of a company’s real cash flow. And as a shareholder (who owns a small slice of a publicly traded company), you deserve your rightful share to that cash flow.
See, high-quality dividend growth stocks tend to be a “who’s who” of great businesses, because an outstanding track record of increasing profit and dividends is usually a pretty good litmus test of quality.
I can name dozens of companies right off the top of my head that have paid out increasing dividends for decades.
Think Johnson & Johnson (JNJ), The Coca-Cola Co. (KO), Colgate-Palmolive Company (CL), and McDonald’s Corporation (MCD).
You’ll often find that high-quality dividend growth stocks are also blue-chip stocks.
Moreover, the growing dividends you could collect buy buying and holding these stocks for the long haul can be an excellent source of completely passive income that grows faster than inflation.
So you end up getting to “have your cake and eat it, too” with high-quality dividend growth stocks: the underlying value of the stocks are increasing as the businesses become more profitable (which increases your wealth as the stock prices rise), and you get to see your passive income increase as the resulting dividends grow.
I was once a beginner, too.
But dividend growth investing can be a great strategy for beginners because you’re often investing in blue-chip stocks that are household names.
You don’t need to think too hard about how McDonald’s goes about making money and paying increasing dividends.
Likewise for hundreds of other dividend growth stocks.
But in order to get a real feel for how dividend growth investing works and why it can be such a fantastic long-term investment strategy for growing wealth and income, I’d recommend checking out fellow contributor Dave Van Knapp’s excellent series of lessons on dividend growth investing.
And perhaps once you feel comfortable actually investing money, I write a weekly series that covers an undervalued dividend growth stock every Sunday.
That means I provide actionable information on real dividend growth stocks every week.
You didn’t ask dumb questions, Tammy. It would be arguable that the only “dumb” thing might be to never ask questions in the first place, which means you’d never get started toward putting the you of the future in a better and wealthier position.
But smart investors know that the best time to get started with saving and investing is today.
So you’ll want to further educate yourself so that you could potentially get started soon.
I wish you luck and success.
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.