How to Start Investing — Democratize Finance for All

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Building wealth and creating solid financial security are longed by many who have experienced firsthand going from the Great Recession to a global pandemic in recent  years.  

For some, the best way to accomplish this is through a savings account that can offer a marginal interest rate because the concept of putting money to work through investing  can seem too complicated. 

In reality, investing allows for the pursuit of a more significant return over the long run and is one of the best ways to diversify assets. Moreover, it can be simpler than people think.  

The biggest misconception is that to get into investing, a vast financial background is needed. Many resources and tools can help you make better decisions today, to help prepare for the future. Getting into financial markets does not have to be intimidating.  

Here's what you need to know.  

Back to Basics: What is Investing?  

According to Investopedia, an investment is an asset bought by an individual or  organization with the expectation that it will generate some future income or profit — stocks, bonds, futures, options, real estate, commodities and cryptocurrency, among  others.  

When someone invests in the stock market, it means trading money for stocks or other securities (all are considered assets). Depending on the investment, there may be different potential returns, risks, and other characteristics, such as  management fees and tax ramifications.  

What are Stocks?  

Stocks are pieces of ownership that can be bought and sold. The stock market is the platform where buyers and sellers trade shares on eligible companies.  

When people invest in stocks, they tend to do so hoping that the stock's price will have increased over time and if they decide to sell. This is because selling a stock at a higher  price could mean that you'll profit from the sale (assuming the price increase was more  than enough to cover your cost basis and any trading fees and transaction costs). In addition, though not guaranteed, some companies distribute profits to shareholders 

through dividend payments to owners of common stock. 

How Does An Investment Work?  

Investing is generally about risk and return, and how many people build wealth over time and prepare for goals over the  long term.  

When someone buys a stock, they buy a share of ownership of a business (or businesses). Of course, depending on the investment, that might include some other type of assets, too.  

Shareholders experience companies' ups and downs, which can affect stock prices.  

Why is Investing Important?  

Say someone is 25 years old, preparing to retire at 65. How could things look if a person decided to invest $100 per month in a fund tracking the general stock market? For the sake of this example we will imagine the person started with an initial deposit of $1,200 and the fund invested in grows 6% annually over the next 40 years. (We’re  not going to consider dividends, taxes, and inflation). The value of that investment  could grow to nearly $200,000. By comparison, if they stashed the same amount in a  savings account with an annual average of 2%, the overall investment might grow to  just about $75,000. Please keep in mind these examples are provided for illustrative purposes only. Actual results will vary.  

Generally, while savings are more stable and stocks are riskier, there is more potential for growth over the long run when investing in stocks.  

What are some Options if I Want to Start Investing Today? 

Most investors don't pick just one type of investment. Instead, many create a diversified portfolio to help manage their risk.  

Traditional investing has always seemed to be only available for those with big pockets or those who can afford the fees and commissions. 

In today's world, several available options look to provide access for all — online brokerages.  

The Future is Here — Democratize Finance  

For example, Robinhood is committed to providing commission-free trading of stocks, options and ETFs through its app. Additionally, Robinhood Crypto, LLC also provides commission free trading of cryptocurrency. The company is among the handful of brokerages that don't charge a commission fee (other fees may apply. View the company’s fee schedule to learn more).  

Robinhood believes that the financial system should be built to work for everyone. So the company’s app lets you start investing at any pace and on your own terms.  

In addition, the company offers through its blog and website transparent information for beginner investors to have a clear picture of how to start. 

The information contained in this commentary does not purport to be a complete  description of the securities, markets, or developments referred to in this material. Past  performance does not guarantee future results. All investments involve risk and loss of  principal is possible. Any contents provided are for informational purposes only, does  not constitute investment advice, and is not a recommendation for any security or  trading strategy. 

Opinions expressed or information provided do not necessarily reflect the views of  Robinhood Markets, Inc. or any of its subsidiaries or affiliates. Robinhood and Benzinga are separate, not affiliated, and unique companies and are not responsible for one  another’s views or services. 

Robinhood Financial LLC (member SIPC), is a registered broker dealer. Robinhood  Securities, LLC (member SIPC), provides brokerage clearing services. Robinhood  Crypto, LLC provides crypto currency trading. All are subsidiaries of Robinhood  Markets, Inc. (‘Robinhood’). © 2021 Robinhood  

For more information, please visit the company’s website.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.