Invest in the Stock Market [From Scratch]

Published: November 18th, 2020 by Andrew

Is it conveniente nowadays to Invest in the Stock Market? Is it difficult as they say? How much money does it take to start?

Let’s face it: the stock market is a dream for many aspiring investors who often think that it is complicated or that it takes a very high capital to start and then give up.

Other aspiring investors actually start but for them the dream quickly turns into a nightmare with the loss, in whole or in part, of the capital initially invested.

We have therefore decided to prepare a complete guide, also suitable for those who are really starting out, to invest in the stock market without making painful mistakes.

In this guide we will also present some of the best platforms to invest in the stock market, such as eToro.

Fortunately, there are many safe and reliable platforms to invest in the stock market, and we will talk about them in detail in this guide, but we decided to immediately mention eToro because it is one of the simplest platforms to use and even allows you to copy, in a completely automatic way, the operations of the best investors in the world.

You can sign up for free on eToro by clicking here

How to Invest in the Stock Market from Home

First of all, we need to understand what it means to invest in the stock market. The Stock Exchange is a regulated financial market where the shares are listed.

Buying shares means buying a part of the capital of a company. Possession of a share gives the right to collect a corresponding share of the company’s dividends. In theory, anyone who owns shares in a company has the right to contribute to the governance of the company by participating in shareholders’ meetings.

In fact, however, the small shareholders have no power and their participation in the meetings is practically useless: those few who dare to speak (they have the right) are considered part of local folklore and derided.

Other small shareholders attend the meetings just for the free buffet. In this guide, however, we explain how to make money by investing in the stock market even with small amounts, so we leave out these folkloristic aspects.

Read more: Buy Stocks Today, pros and cons.

How to make money with the stock market (seriously)

How do you make money by investing in the stock market? We have already seen that the ownership of shares gives the right to collect dividends. Another source of income is represented by the increase in the value of the stock itself: if you buy when the price is low and resell when it increases, you can make a profit.

Few of the beginners know that it is possible to earn even when the price drops. Indeed, the smartest investors are able to exploit any price movement on the stock market to make a profit.

How is it possible? It all depends on the platform you use to invest in the stock market: the best platforms allow both to buy shares (to make a profit in the event of a price increase) and to sell shares short.

Short Selling is a speculative operation that allows you to make a profit when the price falls. There is no need to buy before selling short (this is precisely why the term short is used).

Best Platform to invest in the stock market

One of the fundamental choices for those who want to start investing without making painful mistakes is the choice of the platform. Often the difference between an investor who loses money and one who, on the other hand, manages to obtain profits is represented by the platform and not by the investor’s experience.

What are the characteristics that a good platform for investing in the stock market must offer its customers? Here is a list of the key points:

  1. Be safe: only authorized and regulated platforms offer the highest level of security.
  2. Be free: especially for those who start with very small amounts, paying commissions or fixed costs is a real financial suicide.
  3. Easy to use: a beginner must be able to start right away, without risking making mistakes
  4. Require a low deposit to begin with: beginners (rightfully so) want to test with very small capital (between 100 and 250 euros).
  5. Have a customer support service able to resolve any doubts in real time and, above all, to guide even those who have never invested in the stock market to success.
  6. Offer the opportunity to experience investment on the stock market with an unlimited, free and unconstrained demo.

Unfortunately, as we have already explained, not all platforms are the same. We have carefully selected those that reflect these requirements:

Platform: etoro
Min. Deposit: 50€
License: Cysec
  • Social Trading (Copy the best)
  • Simple and intuitive
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: xtb
    Min. Deposit: 100€
    License: Cysec
  • Free demo
  • Whatsapp Group
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: iqoption
    Min. Deposit: 10€
    License: Cysec
  • Free demo without limitations
  • Minimum deposit low
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: ubrokers
    Min. Deposit: 250€
    License: Cysec
  • Free Training
  • Zero Commissions
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: trade
    Min. Deposit: 100€
    License: Cysec
  • Free demo
  • Free course trading
  • ➥ Start
    1star 1star 1star 1star 1star
    72.30% of retail CFD accounts lose money
    Platform: forextb
    Min. Deposit: 250€
    License: Cysec
  • Free trading course
  • Free trading signals
  • ➥ Start
    1star 1star 1star 1star 1star

    eToro

    eToro is considered to be one of the best platforms ever for those who want to start investing in the stock market and don’t want to make any kind of mistake.

    The eToro platform is very easy to use, even for a beginner but it is not enough: with eToro it is even possible to copy, in a completely automatic way, what the best investors in the world do.

    How is it possible? Thanks to a very functional internal search engine, it is possible to easily select the investors who in the past have obtained the best results with the minimum risk. Just select these investors and the broker’s patented software will take care of replicating all their operations in real time.

    It is important to emphasize that the advantage for the novice investor is twofold: on the one hand, he can immediately get the same results as the best investors in the world, on the other, he can learn by observing live what these successful investors are doing.

    You can sign up for free on eToro by clicking here

    ForexTB

    ForexTB is the other great option available to those who want to start investing in the stock market but want to stay away from any error or problem.

    Not only is ForexTB really elementary to use but it also offers exceptional phone support: all subscribers are called by a stock market expert who offers really valuable information and advice. In other words, making mistakes is almost impossible.

    ForexTB also offers free courses to learn the stock market and all other financial markets. There are also very useful free trading signals available, just sign up to get them. Such reliable signal services usually have a very high cost.

    Finally, it is important to underline how ForexTB makes an unlimited, free and unconstrained demo available to all members. Thanks to this demo it is possible to experiment with the investment in the stock market (without risk) to accumulate valuable experience and therefore go without fail when you start with real money.

    You can sign up for free on ForexTB by clicking here

    Trade.com

    Trade.com is a very simple and intuitive platform, completely free and without commissions.

    Beginners who use Trade.com especially appreciate the personalized course that everyone can receive upon registration: a true stock market expert guides them step by step on the phone with clear explanations, directions and advice.

    Incidentally, we note that coaching of this type is sold for 500 euros / hour by self-proclaimed investment gurus (who actually most of these gurus never made a penny with investments).

    With Trade.com you can have the trading course for free and you can be sure that you have the help of a real expert and not a braggart.

    You can request the Trade.com course for free by clicking here

    Iq Option

    Iq Option is a platform for investing in the stock market that is really simple to use, even for a beginner. The impressive success of this platform is due to the fact that it is possible to start with a very low capital: just 10 euros.

    Even the other platforms we talked about in this article do not require a high investment (between 100 and 250 euros) but no platform requires so little.

    Iq Option is invaluable for those who want to learn how to invest in the stock market since it offers free access to an educational area with an impressive number of video courses that explain trading starting from the basics up to the most complex and profitable strategies.

    Iq Option also offers an excellent unlimited demo account with no restrictions. Access to the demo is also available to those who have not made any deposits.

    You can sign up for free on Iq Option by clicking here

    Mistakes made by who start to invest in the stock market

    In reality, the stock market is not difficult and even those who do not really know anything can start without problems, provided that they study (at least a little), commit themselves and take the time to practice demos.

    Unfortunately, many beginners make painful mistakes which, unfortunately, lead to losses on their invested capital or, at best, the forgoing of profit opportunities. Let’s see calmly what are the main mistakes that are made by beginners.

    Thinking that Stock Market is difficult

    This is the worst limiting thought on the stock market and it is quite widespread. In fact, investing in the stock market is not complicated and it is possible to learn easily.

    We don’t recommend spending money on paid courses, as most of these courses are full of useless theory and cheap. Instead, we recommend that you follow the free TRADE.com course which stands out for the fact that it is all practice-oriented and explains, really, how to invest in the stock market without errors.

    You can download the TRADE.com course for free by clicking here

    Thinking that you need a huge capital

    Many aspiring investors think, wrongly, that a lot of money is needed to invest in the stock market. Nothing more wrong. It is possible to start investing in the stock market with very low capital, even 10 euros may be enough.

    But be careful: if you invest small amounts (as we recommend) it is absolutely not convenient to pay commissions on operations.

    Let’s take a practical example: the Fineco platform, which is safe and legal, applies a fixed fee of 7 euros on each transaction. Those starting with 100 euros, for example, would quickly burn all the capital.

    Using a demo account, then, allows you to start without any investment and no risk: thanks to the demo it is possible to increase the experience and knowledge of the markets without running any kind of risk.

    Thinking that you only earn when the stock market goes up

    Many beginners think that on the stock market you only earn money when the markets are positive. Fortunately, the reality is very different: thanks to short selling it is possible to always earn, both when the value of a stock rises and when it falls.

    This error shows that it is important to know the stock market and investment techniques, at least a little, before starting. One more reason to take the TRADE.com course.

    Wrong investment platform

    This is one of the most dangerous mistakes a beginner can make. We explained in a previous paragraph what are the absolutely essential features of a good quality investment platform: security, no commissions, ease of use.

    In this article, we have only reviewed safe and reliable platforms. However, there are real scams that promise easy money with investments but in reality quickly burn all the capital.

    How do you protect yourself from these scams? Simple, just invest in the stock market exclusively with authorized and regulated platforms (the ones we talked about in this article) and don’t believe the promises of scammers: easy money does not exist.

    Unfortunately, however, the risks are not only linked to scams. Paying commissions on transactions is also a gross error that leads straight to failure. It is always advisable to operate with platforms that do not charge commissions and have no fixed costs such as those we have carefully selected.

    Finally, it is very important to only use platforms that are really simple to use.

    Play the stock market?

    Very often we hear the expression “play the stock market” used. It is a very serious mistake to think that the stock market is a game. In reality, the stock market is not difficult but it takes time and effort to succeed.

    The expression has now entered common use in Europe and therefore we use it but no one should think that the stock market is a game!

    Investing in the stock market is worthwhile

    You have read our guide up to this point, but are still wondering if investing in the stock market is worthwhile? It is completely normal that some doubts may remain about it. Especially a beginner not knowing how the markets work and the real benefits of this business may not understand the caliber of this opportunity.

    However, it will be enough to bring some facts to your knowledge to demonstrate unequivocally that investing in the stock market is really worthwhile. Those who know how to move can profit from this form of investment thanks to the fact that the global economic model of a capitalist type tends to a constant growth of markets and profits.

    First, we want to show a simple graph that speaks for itself. It refers to the stock market trend from 1900 to today. What is shown in the following image speaks volumes about the global economy.

    Invest in the stock market graph

    Let’s interpret this graph

    Interpreting this graph is very simple. It is full of interesting information:

    • The US stock market, born in the early 1800s, has been in a sideways trend for many years. The markets were still closed and trading limited and nowhere near the levels of expansion today.
    • After the First World War, American markets grew enormously and fast enough to create a bubble. The collapse of 1929 was disastrous and is still remembered today as the greatest economic crisis in history.
    • However, the markets soon recovered with a normal setback caused by the Second World War, which however only led to a phase of stagnation that lasted until the end of the conflict.
    • After the end of the second war, the markets immediately began to grow. The post-conflict economic boom sees the economy recover to overcome the pre-crisis highs of 1929.
    • From that moment on for the US stock market, only the war in Vietnam represented a moment of stagnation, but not of decline.
    • Markets subsequently rose steadily to the peaks known today by the stock market.

    From 1890 to today, looking at the graph, it can however be appreciated how the growth has been almost constant. This undoubtedly demonstrates that investing in the stock market is convenient.

    Certainly it is in the long term because as prices rise continuously investing on a 10-year basis can only bring profits. But it certainly is also in the short term, because with the modern platforms we have proposed here, there is also the possibility of speculating downwards.

    Advantages of starting to invest on the stock market

    Investing in shares and on the stock exchange offers numerous advantages:

    1 – Take advantage of a growing economy:

    As the economy grows, corporate profits also grow. This is because economic growth creates jobs, which creates income, which creates sales.

    The higher the paycheck, the greater the boost to consumer demand, which pushes more revenue into the cash registers of companies. This helps to understand the phases of the business cycle: expansion, peak, contraction and depression.

    2 – The best way to keep up with inflation:

    Historically, stocks have had an average annual return of 10%. That’s better than the average annual inflation rate of 2.9%. This means that it is necessary to have a longer time horizon. This way, you can buy and hold assets while expecting them to appreciate even if the value drops temporarily.

    3 – Easy to buy:

    The stock market makes it easy to buy company shares. You can buy them through a broker, financial planner or online, which is much cheaper. Once you open an account, you can buy stock in minutes. Some online brokers like eToro allow you to buy and sell stocks without commissions as we have seen before.

    4 – Make money in 3 ways:

    Most investors intend to buy low and then sell high. They invest in fast growing companies that appreciate value. This is attractive to both day traders and buy-and-hold investors.

    The former group hopes to take advantage of short-term trends, while the latter expects to see the company’s earnings and share price rise over time. They both believe that their stock picking abilities allow them to outperform the market.

    Other investors prefer a smooth flow of cash. They buy shares in companies that pay dividends. These companies are growing at a moderate pace. Finally, those who choose online trading have an advantage over the other categories we have seen because they can also speculate on the downside.

    5 – Easy to sell:

    The stock market allows you to sell your shares at any time. Economists use the term “liquid” to mean that it is possible to convert your shares into cash quickly and with low transaction costs.

    This is important if you suddenly need your money in a hurry. Since prices are volatile, you run the risk of being forced to suffer a loss.

    Invest in Amazon Shares

    Few companies have created such a large and long-lasting amount of opportunities as Amazon among those such as investing in the stock market. Amazon stock trading pays off, as they pay the company’s dividends estimated at several million dollars over the years.

    Amazon also continues to invest heavily in cloud computing, transportation, video content and online video services, competing with Netflix (NFLX) and others. And it leads the smart speaker market with its product line called Echo.

    Founded as a simple online bookstore in 1994, Amazon never seems to rest on its laurels and has eventually become the leading ecommerce service provider. The company is known for its bold moves and for having left its competitors dry-mouthed in almost every market the company has set foot in.

    Above, live Amazon stock quotes.

    Why is it worth investing in Amazon?

    Nearly half (42%) of analysts say they do most or all of their shopping via Amazon this year. This means that the huge Amazon marketplace has now entered into consumer habits perhaps more than one might think.

    It is not every other period that Amazon and its shares do well, as evidenced by the performance of its shares over the last decade.

    If I had invested in Amazon about 10 years ago, this decision would have paid off. A $ 1,000 investment in 2010 would have been worth more than $ 13,300 as of December 9, 2019, for a total return of approximately 1,232%, according to CNBC calculations.

    Over the same period of time, by way of comparison, the S & P 500 achieved a total return of about 255%. It is therefore clear that trading Amazon shares is an incredibly convenient business.

    Read more about investing in Amazon in our full article here.

    To try to invest in Amazon shares with a few clicks, just sign up with the eToro broker (click here to do it for free).

    invest on the stock market

    Conclusions

    Investing in the stock market is a profitable activity that everyone can carry out. You don’t need a big capital (even 10 euros can be enough) and you don’t need to be an expert since everyone can learn with free courses.

    It is really important to use safe, free (zero commissions) and easy to use platforms to achieve success.

    Below, a complete list of the best authorized platforms to invest in the stock market without commissions:

    Platform: etoro
    Min. Deposit: 50€
    License: Cysec
  • Social Trading (Copy the best)
  • Simple and intuitive
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: xtb
    Min. Deposit: 100€
    License: Cysec
  • Free demo
  • Whatsapp Group
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: iqoption
    Min. Deposit: 10€
    License: Cysec
  • Free demo without limitations
  • Minimum deposit low
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: ubrokers
    Min. Deposit: 250€
    License: Cysec
  • Free Training
  • Zero Commissions
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: trade
    Min. Deposit: 100€
    License: Cysec
  • Free demo
  • Free course trading
  • ➥ Start
    1star 1star 1star 1star 1star
    72.30% of retail CFD accounts lose money
    Platform: forextb
    Min. Deposit: 250€
    License: Cysec
  • Free trading course
  • Free trading signals
  • ➥ Start
    1star 1star 1star 1star 1star
    How to start investing in the stock market?

    To get started, you need to open an account on a trading platform, make a minimum deposit and practice on Demo.

    Is investing in the stock market convenient?

    If you choose the right assets on which to invest, of course, investing in the financial markets becomes an extremely profitable activity.

    How much capital does it take to start investing in the stock market?

    Some brokers such as ForexTB allow you to invest as little as € 100.

    What is the best platform to invest in the stock market?

    The most popular broker in Italy is eToro, with thousands of customers in our country and over 10 million worldwide.

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