GREEN BAY, WI (WTAQ) – Following recent spikes in GameStop stock prices that saw a controversial reaction from Wall Street and trading apps like Robinhood, a lot of younger people are showing more interest in the stock market.
“Not only that but with the stimulus check that everyone is about to receive, Marketwatch is saying that is going to probably stir more young people to invest in the stock market,” said Susan Bach of the Better Business Bureau.
The only way to succeed at mobile stock trading is to do your homework before you begin. Get to know the basics of investing.
“I think it’s really important that people first of all educate themselves about how stocks work,” Bach said. “Familiarize yourself with important concepts – expense ratios, commissions, things like that.”
The top resource Bach suggested for learning about the stock market is Investor.gov.
You can even try your hand at trading by doing it virtually. Many platforms allow practice trading, so you can learn how the market works without actually putting your money at risk.
While learning about the market is vital, it’s also a good idea to take a look at the platform you plan to use – and whether it’s actually a good fit for you.
“It’s not just a platform for trading, it’s also going to serve as your broker. So you want to make sure that it has a good reputation and that is legally licensed and registered with the appropriate government authorities,” Bach told WTAQ News. “Examine and compare each app very closely, taking note of things like their fees, trading minimum, stock analysis tools, and all kinds of educational offerings.”
But before you even download an app or putting money into Tesla and Apple, it’s important to understand your current financial situation.
“Financial consultants would likely recommended that you’re in a good financial position before you start trading…because playing with the stock market involves risk. You can’t invest money that you cannot afford to lose,” Bach explained. “That means that you’ve already set aside enough money for an emergency fund and that you’re regularly contributing to a retirement account.”
Bach also recommends keeping an eye out for investment scams, and sticking to brokers that are registered with the SEC.
“Stay away from any kind of high pressure sales tactics or any kind of pyramid scheme. These are all things that young investors really need to research more before they dive into the stock market,” Bach said. “You might see a sponsored ad or something with the hot tip, and you want to be very careful about that.”
With those online ads, companies might be pumping money into buying up their own stock to inflate the price or pushing advertisements about a hot tip, which could end up being a scam.
Learn more about getting into investing, trading, and how the apps work at BBB.org.
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