First Steps to Investing: From Depositing Money to Your First Stock or ETF

Starting your investment journey can be both exciting and challenging. In the previous article, we explored how to choose the right broker. Now that you have a brokerage account, you might be wondering how to transfer funds to your account and make your first stock or ETF purchase.

In this article, we’ll walk you through the step-by-step process of making your first investment – from depositing funds to placing your first order.

Depositing Money into Your Brokerage Account: How It Works

Before you can begin investing, you need to deposit money into your brokerage account. This is the first and essential step toward becoming active in the stock or ETF market. There are several ways to fund your account.

Your broker has provided you with a linked cash account, which is where you’ll transfer funds. First, check the bank account details or IBAN associated with this account, which is typically under your name.

The deposit methods available depend on your broker, but the most common options are bank transfers and instant transfers.

Bank Transfer: This traditional method involves transferring money from your bank account to the linked account at your brokerage. Depending on your bank, the transfer can take one to two days.

Instant Transfer: Some brokers allow you to transfer money instantly to your brokerage account, so you can start investing right away. Be aware that this option may come with additional fees.

Direct Debit: Some brokers offer the option to set up a direct debit for recurring deposits. This is especially helpful if you plan to invest regularly in stocks or ETFs.

Regardless of your deposit method, ensure that you have sufficient funds in your brokerage account before making any investments.

How to Choose Your First Stock or ETF

Once you’ve deposited money into your account, it’s time to choose your first investment. Whether you opt for a stock or an ETF depends on your investment strategy, risk profile, and financial goals.

To help with your research, you can use the money:care ETF and Stock Search, where you’ll find information on key financial and sustainability metrics.

After identifying a stock or ETF you’re interested in, search for it in your brokerage platform. If you decide to make a purchase, specify the number of shares or the amount you want to invest. Be mindful of diversification and avoid putting all your eggs in one basket.

Just before finalizing, you’ll need to place your order.

What Is an Order and How Do You Place One?

An order is the instruction you give your broker to buy or sell securities, such as stocks or ETFs. Here’s how the process works:

Select a Stock or ETF: Choose the security you want to invest in. This could be a specific stock from a company or an ETF that tracks an index like the MSCI World SRI.

Place Your Order: Instruct your broker to buy a specific number of shares or units. Most brokers offer an intuitive interface where you can enter your order details.

Choose Your Order Type: Decide between a Market Order and a Limit Order.

Market Order vs. Limit Order: What’s the Difference?

With a Market Order, you buy the security at the current market price, meaning your order will be executed immediately, regardless of the price. This order type is ideal if you want to acquire the security quickly, with less emphasis on the exact price.

A Limit Order, on the other hand, allows you to set a maximum purchase price. The order will only execute if the security’s price reaches your specified limit. This order type provides more control over the purchase price but may result in a delayed or unfulfilled order if the price is not met.

Generally, a Market Order is used when you’re not waiting for a specific target price.

Making Your First Investment: A Step-by-Step Guide for Beginners

Now that you know the basics, let’s walk through a simple step-by-step guide for buying your first stock or ETF.

Check Your Brokerage Account: Make sure you have enough funds in your account to cover your planned investment.

Select a Security: Decide which stock or ETF to buy. Research carefully and choose a company or ETF that aligns with your goals.

Place the Order: Use your broker’s interface to place the order. Select the order type (Market or Limit) and enter the desired quantity of shares or ETF units.

Confirm the Order: After execution, you’ll receive confirmation that the security has been added to your portfolio.

Congratulations on making your first investment!

What to Keep in Mind After Your First Purchase

After buying your first stock or ETF, it’s essential to monitor its performance. Stay informed about the developments of the company or ETF, especially if you’re investing for the long term.

Remember that investing is a long-term endeavor, and short-term market fluctuations are normal. It can also be helpful to regularly review your investment strategy and portfolio to ensure they still align with your financial goals.

After the First Investment: Monitoring and Making Adjustments

Your first investment is an exciting milestone, but the journey doesn’t end there. It’s just the beginning. A successful portfolio requires ongoing monitoring and occasional adjustments to respond to market changes or new financial goals. It’s easier than it might seem at first glance.

Consider these questions when reviewing your portfolio:

Is the stock or ETF performing as expected? Are your financial goals still the same? Are there market changes that require adjustments?

It’s a good idea to review your investments quarterly or at least annually to ensure your portfolio remains on track.

Conclusion

You’ve reached a critical milestone on your investment journey. The start of investing begins with depositing funds into your brokerage account and selecting your first stock or ETF. By understanding the basics like order types and the selection process, you can take your first steps as an investor with confidence.

After making your purchase, it’s crucial to monitor your portfolio and make adjustments as needed to achieve your financial goals.