How Do I Buy Stocks or Bonds for Beginners?

by Candace Webb, Demand Media

    As a beginning investor, the idea of buying stocks and bonds may have you shaking in your boots; however, your investment portfolio can't grow unless you bite the bullet and make some purchases. According to the Securities Exchange Commission, or SEC, stocks can be risky ventures but offer the biggest payoffs. Bonds are more secure but have a lower return. With a little know-how and preparation, you can venture into the investment world and buy some of each.

    Step 1

    Get serious. Buying stocks or bonds is a grown-up game. Have some money put aside to use for your purchases. You should be able to live without the amount you are investing for an extended period. Your investments need time grow and produce returns without being tampered with constantly

    Step 2

    Educate yourself. Having money to invest won't do you much good if you lose it all. Study the history of the market and understand basic accounting concepts so when you manage your portfolio you will have an idea of what you are doing. Decide on your investment goals, suggests the Center for Personal Financial Education.

    Step 3

    Stick with blue chip stocks and historically recognized bonds. A blue chip stock is a stock that has a history of yielding a fair return. A recognized bond loans money to a government agency, known for paying it back with interest. As a beginner, you don't want to jump into investments by choosing high-risk stocks or bonds. It takes time to understand the markets. You are better off investing your money in blue chip stocks that have already proven their abilities to go the distance. As you gain experience, you can invest in more high-risk products.

    Step 4

    Diversify the funds, suggests the U.S. Securities and Exchange Commission. As a beginner, you will probably make a few mistakes as you learn about investing. Rather than have all of your available investment funds tied into one stock and one bond portfolio, spread the money over several products so mistakes will not be as costly to you.

    Step 5

    Consult with a professional. If you have concerns about your stock or bond choices, sit down with a licensed investment counselor and ask questions.

    About the Author

    Candace Webb has been writing professionally since 1989. She has worked as a full-time journalist as well as contributed to metropolitan newspapers including the "Tennessean." She has also worked on staff as an associate editor at the "Nashville Parent" magazine. Webb holds a Bachelor of Arts in journalism with a minor in business from San Jose State University.