Do You Need a Financial Background to Enter the Market?

The stock market does not require any financial background pre-requisite to invest successfully.  Many recent offerings from mutual fund companies and pension programs allow people to invest without ever knowing what they're holding. Recent mutual fund offerings such as target date funds allow investors a "set and forget" way to invest; simply deposit money to your target date fund regularly and the money managers will take care of the rest.

Some Background Will Help

Knowing a little about the stock market and stock exchanges will certainly help you produce better returns. Remember, every time you let someone else do the work for you, it will come at a cost. Mutual funds offer a spectacular way to enter the market, but charge customers about a percentage point of their assets per year to do the investing work.

If you have an interest in picking stocks yourself and managing your own portfolio, you'll need to dedicate more time to it than just a few hours a year. Managing a portfolio is difficult; knowing when to buy and sell comes with experience and understanding of how the markets work. While the returns of the US stock markets have averaged 10.5% per year, that is no guarantee that you'll be able to duplicate those results.

Mutual Funds Are an Easy Entry

The best way to enter the market is through a mutual fund or employer sponsored 401k programs. A 401K is the best way to get the most out of your investment dollars through corporate matching. Many employers will match a 401K plan 50% up to 6% of your income. Thus, by investing regularly just 6% of your income, your employer will top up your 401K with another 3% of your income. That's a guaranteed 50% return right off the bat that you'll never get anywhere else. For this reason, 401ks are a great way to get started buying stock and understanding how investing works.

Not Everyone Trades Regularly

Only a very slim number of people who are invested in the stock market are trading everyday. Most investors are looking to build wealth for retirement rather than speculate on the ups and downs of daily trading. There are plenty of things that an ordinary person can do without knowing much about the financial district. Shopping around for the best mutual fund is as simple as finding a low fee fund with decent back results.

Investors should never worry that they aren't qualified enough to enter the market. If you think active trading isn't for you, leave it to the professionals. Mutual funds are a very cheap way to get started in the market and will leave you wanting more. For just about 1% per year of your investment, you'll have some of the best investors in the world handle your money in the stock market. Though nothing is guaranteed, the people who manage your mutual fund dedicate everyday to producing returns; that's something not everyone can do when balancing a full time job. The stock market is made for everyone, and everyone should take advantage of it through today's financial services.