A person can start investing in stocks by conducting research, choosing the type of stock, looking at financial statements and choosing how to invest, according to About.com. Investors can use a 401k, brokerage account, direct stock purchase plan or a Traditional IRA to make the purchases.
There are different stock types that investors can choose, including common, preferred, mutual funds, money markets and real estate funds, notes About.com. A common stock signifies ownership in the company, and preferred stock offers high-priced dividends. Bonds come in the form of corporate, municipal or U.S. bonds. Money markets are attached with liquid funds that safeguard purchasing power, and real estate funds are linked to properties and housing projects.
An important aspect of research entails reading a 10K, which is an annual report from the Securities and Exchange Commission, and it is a vital document in regards to investor information, explains About.com. A 10Q is a quarterly version of the 10K. CEOs and other important figures in a company issue annual reports about internal operations. A proxy statement is information that discloses Board of Directors information and how management is paid. Three financial statements worth looking into are cash flow statements, income statements and balance sheets.
Investors can also use a Simple IRA, Roth IRA or SEP-IRA to make investments, reports About.com. There is also the option of using a dividend reinvestment plan instead of a direct stock purchase plan.