Understand Stocks

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Mutual funds versus stocks

Beginners usually get their first taste of the stock market by investing in mutual funds, often through a 401k offered at work. Mutual funds let you pool your money with other investors to buy stocks. This diversification offers some security, since the fate of any one company won’t affect your overall fund.

But it’s also possible to invest in individual stocks. While this entails a little more risk, there’s also the possibility of more reward. Mutual funds tend to go up or down with the market, but a particular company’s stock may buck the trends. The good news is that you can pull all of your diverse accounts -- both your 401k and your brokerage accounts -- into one place when you sign up with Mint.com. What’s a brokerage account, you ask? Read on.

Start with a discount broker

The first step in investing in individual stocks is to open an account with a brokerage. Mint being Mint, of course, we recommend a discount broker, which is much more affordable than a traditional full-service broker. (Although you won’t be able to look like a big shot by picking up the phone and saying, “Sell, sell, sell.”) They also have much lower fees or commissions, often as low as $5 to $10 per trade.

Discount brokers are better for self-directed investors who don’t need advice on particular stocks. But “self-directed” doesn’t mean you’re alone. Sign up with Mint.com and we’ll help you track your brokerage account right along with the rest of your finances.

Make it automatic

Once you’ve opened an account (usually by putting in the minimum investment of around $750 to $1000), you can start investing. Mint recommends setting up automatic monthly contributions. You can transfer a specified amount from your savings or checking accounts to your brokerage account, which means you won’t be tempted to spend the money instead.

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Mint shows you your portfolio alongside your checking, savings, and loans so you'll have a complete picture of your net worth.
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Want to learn more? See our features on Real Estate, Commodities and Mutual Funds.