The Tips, Tricks, and Terms Every First-Time Investor Should Know

When you think about investing, you might picture a bunch of people in suits clamoring over each other on the floor of the New York Stock Exchange. It can seem like the domain of far savvier people. However, you don’t have to look like you could be an extra in “The Wolf of Wall Street” to get started with stocks. It’s actually easier than you might think.

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You can even begin your investment journey while relaxing in your pajamas, right at your kitchen table. With a willingness to learn and experiment, you can grow your wealth and build passive income through the stock market. And you don’t even have to travel to New York.

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Do you want your life to feel like it could be a montage from a Jay-Z video? Or are you hoping for a quieter lifestyle of sustainable returns? The latter is more realistic and practical when it comes to achieving major life goals like affording your retirement, buying a house, or paying for a family member’s education.

Once you know what you want, you’ll have a sense of how much you need and by when. If you’re looking to buy a house, you’ll likely need returns on your investments earlier than you would if you’re investing for retirement.

Setting a timeline for your goals will also help you determine your level of risk tolerance. While you might have heard that term casually bandied about as a piece of financial jargon, what it really means is quite simple: It’s the amount of potential market volatility and loss you’re willing to weather while pursuing your goals.

If you’re investing for a long-term goal, like retirement, you might be able to be more aggressive since you’ll have more time to recover from market dips. However, if you need access to your money sooner, you’re probably going to be a little more cautious and risk-averse.

Not all investments are created equal. The type of account you choose will depend on your goals. There’s the standard brokerage account that lets you buy and sell various investments like stocks, bonds and funds. This option works well for people who want more control over their investments. Just know that gains from these accounts are taxable, meaning you could owe taxes when selling investments that have increased in value.