6 Ways to Start Investing in Stocks in 2022

Investing in stock means buying shares of companies. If the share price goes up, you make money.

When you buy a diverse mix of stocks and choose solid companies to invest money in, you should be able to earn a higher return than with many other investments such as bonds. This can help you build wealth.

But it can be intimidating to figure out how to start investing in stocks. The good news is, there are six simple options if you want to begin putting your money into this asset class in 2022.

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Participating in a 401(k) is often the easiest way to start investing in stocks. A 401(k) is a workplace retirement plan offered by some employers.

Most 401(k)s offer a limited range of investment options, so it's easier to research which is best. Many also create a default investment portfolio for you that gives you exposure to some stocks and some other assets.

While sticking with the default may not be the optimal approach, it can at least get some of your money into the stock market as you learn more about how investing works.

Your company may also match some of the contributions you make to your 401(k). And you'll get tax breaks for investing, so this account can pay off for you in a number of ways.

ALSO READ: 3 Smart 401(k) Moves to Make in the New Year

If you open a brokerage account, you can also buy shares of individual companies.

This can enable you to earn the best returns if the company does well, but is a riskier approach to investing in stocks since you're betting on one particular business.

If you research companies carefully and buy stock you'd be happy to hold for the long term, you can reduce the potential chances for loss that accompany this investing technique.

Exchange-traded funds (ETFs) allow you to make a single investment and gain a very small ownership stake in many companies.

Many ETFs are designed to mimic the performance of financial indexes. For example, you could buy an S&P 500 ETF that aims to track the performance of the S&P 500 index. Some are designed to give you exposure to specific kinds of stocks such as shares of companies in the healthcare or marijuana industries.

ETFs can be a lower-risk approach to investing in stocks since you don't put all your eggs in one basket. They're also easier to research, since you primarily need to focus on the fund's goal and the fees it charges.

Target date funds allow you to choose your investment based on when you'll need the money. For example, if you're investing for retirement that you expect to start in 2040, you could buy a 2040 target date fund.

A target date fund invests an appropriate percentage of your money into stocks and into other assets, such as bonds. These funds take care of rebalancing your portfolio for you, always giving you the right level of exposure to stocks and other investments based on what risk tolerance is appropriate given your timeline.

These funds are often very low risk since you gain a small ownership stake in many different companies, as well as in some other assets besides stocks. But fees can be higher than with some other investments.

ALSO READ: What Are Target Date Funds?

Robo-advisors are a popular and easy way of investing in the stock market.

When you invest money with a robo-advisor, you'll answer a series of simple questions. The questions are designed to assess your risk tolerance and investing timeline.

The company then uses an algorithm to determine an appropriate mix of investments for you. Your money is put into different funds, which give you exposure to many asset classes including stocks.

With a robo-advisor, you literally don't have to do anything as the program takes care of managing your portfolio. But you do have to pay fees for the robo-advisor's services. Although the fees are lower than you'd pay for personalized investment advice, they can add up over time.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Many brokerage firms allow you to buy fractions of shares of stock. This means don't have to buy an entire share to get a small ownership stake in a company. Since you don't need to buy a full share, you can invest in any company you want -- even those with high stock prices.

Fractional shares make it easy to invest in stocks with very little money. You could buy a part of a share with as little as a few dollars. This makes it easy for beginning investors to test the waters and learn more about choosing sound investments without risking huge losses.

ALSO READ: Why 2022 Is the Year You Should Swear Off Penny Stocks for Good

Each of these techniques can make investing in stock easier than you imagined.

Pick one and put your money into the market in 2022 so you can begin developing your investing skills and putting your money to work for you.

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