How to Play the Stock Market for Beginners
- 1). Play a fantasy stock market game.
If you're a beginning investor, the safest way to invest is to practice your skills before risking a single penny of your own money. Wall Street Survivor and Marketocracy are two excellent virtual investing games that you can play for free. (See "Additional Resources," below.) - 2). Open an online brokerage account. Many discount brokers are available. TD Ameritrade, eTrade and Zecco Trading are all acceptable choices.
- 3). Buy an index fund.
The safest way to invest is by owning a diversified portfolio. An index fund is a collection of multiple stocks across multiple sectors. The S&P 500, Russell 2000, Dow Jones 30 and Nasdaq 100 are good starting points. - 4). Purchase well-known blue-chip companies.
Building a diversified portfolio of blue-chip companies is the cornerstone of personal investing and has proven to work for many years. Companies like Exxon Mobil, General Electric and Proctor & Gamble are good examples. - 5). Buy Mutual Funds.
Mutual Funds have a team of experts who do all of the work for you. You simply fund the account, buy shares of the mutual fund and they do the rest. - 6). Hire a financial adviser or financial planner.
If you want to play the market yourself but have someone constantly looking over your shoulder, hire a fee-only financial planner. - 7). Hire a full-service broker.
Once you open and fund an account, the broker will trade your money depending upon your risk levels and desired rate of return. Brokers are fairly expensive, but well-trained full-service brokers can generate substantial returns.
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