Are you feeling overwhelmed about how to start investing in stocks?

These days, whenever you talk about wealth management, stocks always come up. But there are also many saying "stocks are gambling," and many people really don’t know where to begin. I used to think that way too, but I realized that with proper knowledge and strategies, you can approach it more systematically than you might expect. So this time, I’ve organized how to start investing in stocks from the very beginning. From opening an account to investment strategies, these are the essentials beginners actually need.

If you ask what exactly stocks are, you can think of them as securities representing ownership in a company. When you buy stocks, you own a part of that company, and if the company does well, you can receive dividends and see capital gains. For example, owning one share of Samsung Electronics means you are a tiny part owner of Samsung Electronics.

However, stocks aren’t suitable for everyone. You need to accurately understand your investment personality, financial situation, and risk tolerance. Looking at the S&P 500 index, it has recorded an average annual return of about 10% since 1957, which is the result of consistent long-term investing. But short-term volatility is very intense. During the pandemic in March 2020, the S&P 500 dropped 34% in just one month. Being psychologically able to withstand such sharp declines is also an important point.

There are various ways to trade stocks. You can buy and sell individual stocks directly, or diversify your investments through products like ETFs or funds. Recently, fractional trading and dollar-cost averaging are also popular, especially for beginners. You can invest small amounts in expensive stocks, and by automatically investing a fixed amount each month, you can build long-term assets.

Now, let’s talk about the first step of how to start investing in stocks: opening an account. These days, it takes just a few minutes via smartphone apps. With just your ID, you can handle everything from identity verification to document consent digitally. There are several types of accounts. A regular brokerage account allows free trading of domestic and international stocks, while an ISA offers tax benefits and is preferred by long-term investors. CMA accounts pay interest on deposits and are also suitable for short-term management.

Here’s a tip: when opening your first account, it’s important to compare fees carefully and choose wisely. If you place orders through staff, it costs about 0.5%, which is expensive, but online trading is much cheaper these days. Also, once you choose a securities firm, you tend not to switch easily, so it’s best to select carefully from the start.

Before buying stocks, you should also learn how to analyze them. Technical analysis predicts future price movements based on past price trends and trading volume, using indicators like moving averages or MACD. Fundamental analysis, on the other hand, looks into a company’s financial statements and management performance. Metrics like PER, PBR, and ROE help assess the company’s actual value.

Investment strategies mainly fall into two categories. Short-term trading aims for quick profits, like day trading, which can yield high returns but also involves rapid losses. It also incurs higher transaction costs. Long-term investing involves holding assets steadily for over five years. Investors like Warren Buffett use this approach, benefiting from compound interest, which can significantly increase returns over time.

To reduce risk, diversification is essential. As the saying goes, "Don’t put all your eggs in one basket." Spreading investments across multiple stocks and sectors can lower the risk of a decline in any single company or industry. Setting stop-loss orders, periodically rebalancing your portfolio, and investing gradually rather than all at once are also effective strategies.

Here are some tips for actually starting your stock journey: begin with small amounts. Gaining experience through practice is the fastest way to learn. Also, avoid blindly following overheated markets like theme stocks or “Ttang” stocks. Objective analysis is crucial. Make it a habit to read economic news for 30 minutes daily, and check earnings reports and key economic indicators of your interest stocks. Keeping a record of your investment reasons and outcomes for each trade will help you analyze and improve your investment patterns later.

Ultimately, investing in stocks is not a short-distance race but a marathon. Thorough analysis, rational risk management, and continuous learning are the keys to success. If you learn how to start investing properly and proceed cautiously, it can become a powerful tool to significantly grow your assets over the long term.