For those who are new to investing, a common question might be: Can beginners invest in stocks? The answer is absolutely yes!

If you’re a novice investor, we’ve outlined three key steps to prepare before you start investing in stocks, along with five factors to help you choose a brokerage. Feel free to use this article as a reference!

For those who are unclear about what stocks are, check out our article: A must-read for stock market beginners! What are stocks? What are the benefits of investing in stocks?

Three Preparations Before You Start Investing

Accumulate Capital – You Need Funds to Generate Returns

The first step in stock investing is to accumulate sufficient capital. The term “sufficient” can vary from person to person. If you’re unsure how much capital you need, consider this approach we previously suggested: first save up an emergency fund, then allocate the remaining money for investing.

Thanks to odd lot trading, investors can now buy quality stocks at lower prices, making the size of your initial capital less of a barrier. Additionally, ETFs have become popular recently, allowing investors to access market-like returns with smaller amounts of capital.

Gather Information and Build Insight

There is a wealth of information on investment and finance available through newspapers, books, blogs, YouTube channels, and podcasts. Absorbing vast amounts of information is a must on your investment journey. Choosing reliable sources is equally important. Additionally, keep on following fiisual's article, and we will continue sharing other quality resources in the future.

Paper Trading to Accumulate Experience

While you’re building your capital and continuously gathering information, you can also practice trading through paper trading platforms to gain experience. Although paper trading doesn’t fully capture the emotional challenges of real-life investing, it’s still a good way for beginners to practice.

For Taiwan stock market, Cmoney offers a “Stock Monopoly” paper trading platform where users can trade with virtual accounts. For international stocks, many brokerages provide “paper trading” options. We recommend the paper trading platform from Investopedia, where you can start simulating U.S. stock trades for free after signing up.

Five Considerations When Choosing a Brokerage

Once you’ve completed the three steps above, you’ll need to set up two accounts: a brokerage account and a settlement account.

Simply put, the brokerage account is where your stocks are held, while the settlement account is where funds are deducted during transactions.

With so many banks and brokerages available, you might wonder: which one is right for you? Based on your future needs, below are five factors to consider when selecting a brokerage

Consideration 1: Are you planning to do high frequency trade?

Have you decided on your investment strategy yet? For Taiwan stocks, a 0.1425% fee is charged by brokerages on all transactions. To attract investors, brokerages offer various discounts on these fees. If you plan to trade frequently, fee discounts can significantly impact your overall profit, so choosing a brokerage with lower fees can reduce your transaction costs.

Consideration 2: Are you planning to use Odd Lot Trading?

If you’re a small investor with limited capital and can’t afford some of the high-priced stocks but still want to invest in certain companies, odd lot trading might be your best option. Be sure to compare whether brokerages offer discounts on odd lot trading fees and lower minimum charges.

Consideration 3: Are you planning to use Dollar Cost Averaging Strategy?

If you plan to use dollar cost averaging method in the market, check the fee discounts and minimum charges brokerages offer for regular investment plans. Given the growing popularity of dollar cost averaging investing, many brokerages now offer plans with fees as low as 1 NT dollar.

Consideration 4: Are you planning to trade International Stocks?

With easier access to information nowadays, many investors are also looking at international opportunities. If you’re considering investing in overseas markets like U.S. stocks, the discounts on international trading fees will be a key factor to consider. Different brokerages offer various discounts on fees and minimum charges for international transactions.

Consideration 5: Are you planning to trade on Mobile frequently?

Are you a full-time trader using multiple screens or an office employee checking trades on your phone? While most brokerages now offer mobile apps or web-based trading (some limited to Windows systems), the user interface can still vary. Check if the brokerage’s mobile app interface meets your needs before making a decision!

We hope these tips on ” the three things beginners can do before investing in stocks” and “ the five considerations for choosing a brokerage” are helpful!

If you’re ready to invest but unsure how to pick stocks, check out our article A must-read for stock market beginners! How to navigate the vast stock market: Five common stock classification methods