How to get started in the stock market as a software engineer

How to get started in the stock market as a software engineer

Ruben Leija

As an engineer myself, I was always curious how I could go about building my wealth and securing my future finances with the stock market. But I asked myself, “How tough is it for an engineer to start with stock market?”

The answer is, not very hard at all.

This my easy, step-by-step guide to learn how to start investing in the stock market and make money from it.

In this article, I’ll cover the following topics:

Disclosure: Please note that some of the links below are affiliate links and at no additional cost to you, I’ll earn a commission. When you sign up for a broker accounts using my Webull affiliate link, they compensate me, which helps make this guide free of charge to you. Know that I only recommend products and services I’ve personally used and stand behind.

Let’s get started with the easiest method of investing in the stock market.

1. Pick an online broker account

First, it’s time to pick a brokerage account before you start investing in the stock market.

Picking a brokerage account that is reliable and has a credible history of great customer support is vital to your investment portfolio. Remember when you’re investing, this your money you’re putting on the line, so make sure you pick a brokerage account that cares as much about your money as you do.

What is a brokerage account?

A brokerage account is a special type of investment account that allows you to buy and sell assets such as stocks, bonds, mutual funds, ETFs, and some started to allow Crypto.

These types of accounts are meant to help you put your money aside and let it compound for the future or to save up for a big purchase. You can use your funds however you want, whenever.

This type of account will be needed for the following investment types.

What’s the best online brokerage accounts to use?

There are several great online broker services you can use for your investment. There are 2 companies I’ve found that best checks all the key boxes for new investors, which is Fidelity and Webull.

Regardless of what you choose, you should be looking for a broker account service that prioritizes your money and assets and you would. Great customer support, providing top notch trading features, and a reliable track record are a must.

The combination of trading platforms I personally use are Fidelity and Webull.

—> Click here to head over to Webull and hit the blue “Get Started” button and claim your 2 FREE stocks

Recommend option #1 – Fidelity (ww.fidelity.com)

What I like about Fidelity is that they allow you buy and sell fractions of a stock.

What does that mean? Let’s say that you have only $100 to invest and you want to buy a $TSLA stock which is well above $500 per stock.

Fidelity will allow purchase a fraction of a stock that is worth $100 on the time of purchase. This gives small investors an opportunity to start small on some very big stocks.

What I also love about Fidelity is that they’ve been around for a long period of time, and offer a broad of services such as:

and more.

Click here to get started with Fidelity.

Strongly Recommended – Webull (www.webull.com)

Webull was founded in 2017, and appeals to the mobile-first generation. They have a slick interface for desktop and mobile apps and deliver an impressive set of tools for active traders.

The pros to this trading platform are:

They do not provide mutual funds.

Webull is my primary driver and highly recommend to anyone getting started with investing.

Click here to get started with Webull.

How to deposit money into your brokerage account

Will continue to use the Webull application as an example. Once you’ve created your Webull account, you can go to the deposit center page on the web.

You’ll attach a bank account wether you decide ACH or Wire, and enter the amount of money you want to deposit into your account.

How to purchase a stock or an ETF

Once the money is available to be used in your Webull account, you’ll want to go to the trade screen of Webull.

On the top right of the Webull trade screen you can find a search bar for symbols.

There you can search ETF ticker symbols or individual stocks.

Once you find the symbol you want to purchase you should see a buy and sell widget on the right side of the trade screen.

There you may add the configurations needed to make a purchase on a stock or an ETF.

For new investors, selecting the order type to be MARKET and add the quantity of shares you want to buy is the easiest method for you to begin.

2. Pick your investment strategy

Now that you know how to pick a brokerage account, how to add money to your account, and how to buy and sell an ETF or an individual stock, it’s time to find out what type of investor you want to be.

You’re not limited to just 1. You can pick as little as 1 type and continue adding as you get more experienced.

Investment type 1: Mutual funds

A mutual fund is a type of financial service made up of many money managers (professionals), who you give your money for them to allocate and invest, so you may receive capital gains or income from your investment.

Again, you give your money to money managers aka professionals, and they will take care of the rest. This is by far the easiest form of getting started with investing in the stock market for a beginner.

There are 2 types of mutual funds you need to be aware of:

These 2 mutual fund types both charge a commission fee. But how they go about it may differ. Let’s go over the 2 types.

Mutual fund type 1: Loaded Mutual Fund

Load funds are mutual funds that charge commission on every initial investment.

Let’s say you invest $1,000. The mutual fund will charge around 5% of the $1,000, which ends up being $50.

So what you really end up investing with $950.

Let’s say that a month later you want to add another $1,000. The same fee of 5% will occur.

The fee you pay ends up compensating the broker, financial planner or the investment advisor for their time and expertise.

Mutual fund type 2: No-load Mutual Fund

This type of mutual fund is not bought through a broker. You buy them directly from a company.

You will typically see their advertisements on magezines, and websites.

Some companies are like Vangaurd or Fidelity.

No-load do not charge a commission. What does this mean?

Let’s say you invest $1,000 through one of these companies. Typically a load mutual fund will charge around 5% of the initial deposit, which is more like you’re investing $950 instead of $1,000.

$1000 – ($1,000 * 5%) = $950

Just because you they don’t charge commission fees doesn’t mean it’s cheaper.

All mutual funds have an annual maintenance fee based on the balance you have at the time.

Let’s pretend you now have $100,000 in your investment portfolio and the maintenance fee is 0.75% to maintain your account.

That means you will be charged $750 maintenance fee for the year.

Some companies may charge over 1% or over maintenance fee. I STRONGLY recommend you AVOID those.

Medium: Exchange-traded fund also known as ETFs

ETFs are considered low-risk investments because they are low-cost and hold a basket of stocks or other securities, which increases your diversification.

If you’re a beginner investor ETFs are an ideal type of asset to build a diversified portfolio. ETFs don’t require a lot of watching over and provide a consistent growth year-over-year.

During huge market crash, ETFs may take a hit, but nowhere near as an individual growth stock.

A real-world world example of how an ETF works

Let’s take a look at the $SPY ETF, also known the SPRD S&P 500. This ETF is of the most popular funds that aims to track the Standard & Poor’s 500 index.

It is comprised of the 500 large and mid-cap U.S. stocks. These stocks are selected by a committee based on the market size, liquidity, and industry type.

The $SPY is allocates its fund into the following sectors:

Companies such as Apple, Amazon, Facebook, Tesla and Microsoft are some of the top holdings in the $SPY ETF.

Hardest: Investing on individual stocks

Purchasing an individual stock is considered a high risk investment because of the wide swings in price, and the potential of large losses if the company goes south.

With that said, with high risk comes high reward. On green days, your potential gains will be bigger than going with an ETF or a Mutual fund.

Pros

Cons

3. Learn to read stock charts

Stock charts show a record price and volume history that help you, the investor, determine whether your stock is appreciating in value or getting devalued. At some point I highly recommend you to at least understand the basics of reading a stock chart. As it may help you, the investor, make better decisions and avoid giant losses in your money.

If you’re interested in going from beginner to pro, then you should look at the my Stock Charts 101 course. In that course, I will help you learn to setup your charts, explain different types of indicators, and when to buy and sell stocks as a long term investor and swing trader.

Click here to learn how to read charts.

4. Diversify your investment portfolio to reduce risk

Diversification is an important strategy for your investment portfolio to reduce risk and uncertainty that the stock market may create.

Think of it this way, if you have one poor performing strategy, you can offset the loss with another better performing strategy. This may limit potential gains, but the stress of losing your money because you put all your eggs in 1 basket is not worth to sleep over.

You can always start with a Mutual fund, and add an ETF afterwards. Maybe 2 or 3 months later, once you get more experience, you can start adding individual stocks while keeping your other strategies still running.

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