3. Getting Started

Now you know the rewards of owning a stock portfolio and are excited to start learning how to invest. This is the time that you might ask: how much money do I need to start? Or when is the best time to start investing? Personally, my suggestion is to start as early as possible to maximize the power of compounding on your investments as stated in the earlier chapters. Even if you have a small amount of savings at this time, say around $5000, if it is idling at a bank account earning negligible profits, I would suggest you put it to good use through investments. It would give you a good starting point to get familiar with the markets and gain some experience while you continue to save money through your day job. Then, as you become more comfortable with investments, you can progressively pump in more capital into your funds. Take note again: Do not expect to take out any capital from your fund in at least the first few years of your investments as this will greatly reduce the returns you can achieve from your portfolio. Therefore, my take is that you should only commit savings that you do not intend to draw out in the short run. It is always good to leave some cash in the banks for any unforeseen situations so that you would not have any liquidity issues going forward.

The first thing that you should do is to set up a brokerage account. Most brokerages these days have an internet trading platform where you can place your orders online instead of calling your broker. My suggestion is to do some research on the various brokerage houses you have in your city and find the one with the most user friendly internet platform and a good research team. This allows you to be exposed to all the analyst reports that the brokerage house does, which will be extremely useful when doing your stock analysis. Make sure to also ask your broker to explain to you how trades can be placed and the payment procedures. Spend a few days to get familiarized with the platform and transaction procedures and once you are ready, you can now start researching and find undervalued stocks for your portfolio. Lets now proceed to the next chapter: The Stock Analysis Process.