Making money in stocks is typically a long-term strategy—very few people see massive returns overnight.

Here's how you can build wealth steadily through stock investments!

How to Make Money in Stocks

To start making money in stocks, open an investment account and begin buying individual stocks or stock-based funds. The key is to use a buy and hold strategy, where you invest for the long haul. You can also focus on dividend-paying stocks for consistent income and explore emerging industries for growth potential.

1. Open an Investment Account

To start making money in stocks, the first step is to open an investment account. Similar to a bank account, you deposit money into this account, and then you can use those funds to buy stocks. An investment account, like a 401(k), Roth IRA, or traditional brokerage account, isn’t an investment on it's own but is where your investments live.

There are various types of investment accounts, and choosing the right one can save you money on taxes. It might even be beneficial to have multiple accounts. For example, financial advisors often recommend starting with a 401(k), especially if your employer offers a match. After that, they typically suggest investing in a Roth or traditional IRA for tax benefits, and then moving on to a traditional brokerage account if you have extra funds to invest.

2. Choose Stock Funds Over Individual Stocks

If you're looking to make money in stocks, there's an easier and often more lucrative way than buying individual stocks investing in stock funds. Index funds, for instance, contain dozens or even hundreds of stocks that track a market index like the S&P 500. With these funds, you don’t need to have in-depth knowledge of individual companies.

By investing in funds, you spread your investment across multiple stocks, lowering your risk. If one company fails, it likely won't impact your portfolio as much as it would if you were only invested in that one company. While individual stocks can offer higher returns, they come with greater risk and require a lot of research to maximize profits.

3. Stick with the Buy and Hold Strategy

One of the most effective ways to make money in stocks is to stay invested for the long term. The buy and hold strategy involves purchasing stocks you believe will perform well over time, and holding onto them for years. The average stock market return is around 10% annually—much higher than what you’d get in a savings account or bonds. But many investors miss out on this return by buying and selling at the wrong times, often reacting to short-term market fluctuations.

Most financial advisors recommend only investing money you won’t need for at least five years, allowing you to ride out the ups and downs of the market. The longer you're invested, the more opportunities your investments have to grow. Stocks with strong performance tend to increase in value, benefiting long-term investors.

4. Consider Dividend-Paying Stocks

Staying invested for the long term also allows you to collect dividends if the companies you’re invested in pay them. If you’re frequently buying and selling stocks, you could miss the key moments when dividends are paid out. High-dividend exchange-traded funds (ETFs), which work similarly to index funds, can also be a great way to earn passive income through dividends.

Investing for Beginners - How I Make Millions from Stocks (Full Guide)

The video by Mark Tilbury