It might feel a little intimidating to start investing. As a college graduate that spent so much of my time focusing on school, basketball and my health, I was interested in investing but didn’t know where to start. I also had so many questions like:
- Where do I purchase stocks?
- How much could I invest?
- What types of commodities should I buy?
- Am I rich enough to start investing?
If you’re an athlete reading this, let’s get one thing straight: athletes… can… invest!
More importantly, athletes should invest because investing your money gives you more independence, allowing you to grow wealth. By growing an investment portfolio, athletes have the potential for higher returns vs. putting thier money into a traditional savings account.
Even if you don’t have a lot of money right now, you can take small steps to build your over time. You don’t need to be super rich or older to have a brokerage account either. Just know that the sooner you start, the faster you’ll learn about the market and feel more confident in building your equity.
I decided to open an online brokerage account as my first step because it was an easy way for me to invest and learn about different securities at my leisure. For more information about brokerage accounts and my tips for beginner ivestors, keep reading!
Understanding the Basics: What is a Brokerage Account?
A standard brokerage account is an investment account where you can buy different investments like mutual funds, stocks, bonds, etc. Like a regular bank account, you can add funds to your brokerage account at any time and buy investments when you’re ready.
What’s great about many brokerage accounts is that you can contribute as much or as little as you want, and won’t receive any penalties for withdrawing from your account early.
Here are a few tips I from my experience opening my first brokerage account, tips that might help athletes looking to invest for the first time:
Tip #1: Determine the type of investor you want to be. As a college graduate working more than 40 hours a week, I didn’t want to spend most of my time monitoring my investments. I also didn’t want the stress and anxiety that comes with watching the market rise and fall each day. For me, opening a online brokerage account was the best option for me, because it allowed me to ‘set and forget it’ when it came to putting money aside and investing.
Tip #2: Understand the terms. It’s so important to understand as many investment terms as possible before actively contributing to your brokerage account. By understanding the basics and reading everything before you sign contracts and pay fees, you’ll save yourself a lot of money and confusion if something doesn’t work out the way you expected.
Tip #3: Determine your investment amounts. Before you start contributing to your account, you should determine how much of your income you want to allocate to investing. When I started, I made sure to allocate a certain percentage of my earnings to my necessities, debt repayment, emergency savings and then my investments.
Tip #4: Understand the risks & fees. When it comes to anything related to the stock market, there will always be market fluctuation. Being prepared to ride out the storm is something the best investors do. Brokerage accounts are also subject to fees. When I first started investing, every purchase & sale of a stock was subjected to a $7 fee. I was also responsible for annual fees for my account.
Tip #5: Only invest what you can afford to lose. This is one of my golden rules of investing. Money market accounts are very unpredictable, so I believe athletes should invest money they can afford to lose. This means never putting your emergency savings or money you would use to cover your basic necessities into your brokerage account.