Disclosure: This content uses referral links. Read our disclosure policy here for more information.

In a few earlier posts we discussed stocks, bonds, and mutual funds. Now it’s time to talk about how we actually go about investing in them.

You’ll want to open up what’s called a brokerage account. You may have seen ads for companies like Charles Schwab, ScottTrade, etc. Well, those are brokerage companies you can use to buy and sell stocks. There are several of these companies out there and each of them have their own pros and cons. We will discuss more in depth what information you will need to know when looking at brokerage companies in another article.

Next, probably the hardest part in this entire process. Determining what to buy. First off, let me say this, I DO NOT recommend beginner investors to invest in individual stocks. It is not always a straight-forward thing and it is definitely not for someone who is risk-averse. A few things to keep in mind when deciding what to invest in:

• What is your timeline? Will you need the money in the next few months or are you ok letting your money ride out for the next few years?
• How much risk are you willing to take?
• Put out any vision of picking a couple of high risk tech stocks and becoming a millionaire in a few months. If it was that easy everyone would do it.
• The larger brokerage companies offer extensive research tools to help you with your investing decisions. If you sign up with one of them make sure to use these tools as a lot of them are included with your account.
• Don’t just “set it and forget it”. You don’t need to monitor your investments every hour of every day but do try to keep up with what is going on in the financial world and how it may affect your investments.

If you’re not starting off with a lot of money, don’t let that deter you. Check out this great book that talks about how to start investing with as little as $50: