Who has two thumbs and invests like a boss? You, when you have an account with FolioFirst.
FolioFirst is an easy way to get started if you're new to investing, or you're looking for a simple investment platform that still has lots of great benefits.
We bring you tips and tools to help you start – and stick with – an investing program so you can reach your goals. This article will help you get familiar with a few basic concepts to build your investing confidence.
When you purchase a stock, you are buying ownership in a company. That also means you're buying into the fortunes of that company, hoping for the stock to increase in value. Of course, a stock's price can fluctuate up or down, depending on market conditions, and your investment could lose value, so be sure to keep an eye on your portfolio (see more about Gains and Losses below). You might also purchase a stock that's historically paid dividends to generate some additional income in the future
Pro Tip: FolioFirst offers you more than 200 stocks to choose from in the companies you know. Think Apple, Facebook, Netflix, McDonald's.
Fractional share trading is about investing the way YOU want. Let's say you're craving an apple. You wouldn't buy the whole tree just to get one apple, right? That's how fractional share trading with FolioFirst works. Buy as much or as little of a stock as your heart (and wallet) desires. Even invest in some of the most expensive stocks. Let's say a stock you like is trading at $1,000 per share, but you only have $500 to invest. With FolioFirst, you can buy just $500 worth, or one-half of a share.* Don't worry, just enter the dollar amount you want to invest and we'll do the calculations for you.
Exchange-Traded Funds (ETFs)
ETFs are a fast-track way to access wide portions of the market. ETFs are portfolios of different securities – such as US stocks, foreign stocks, or bonds – that are designed to track an investment index Like mutual funds, their better-known cousins, ETFs offer you diversification (see below for a definition of “diversification”), which can help to lower the risk of investing in a single security.
Pro Tip: FolioFirst offers three ETFs to choose from covering both domestic and foreign stocks, as well as U.S.-issued bonds!
Find them listed in the Trade Center.
A gain (or loss) in investing is when you are holding a share of stock or a fund and that share is worth more (or less) than you paid for it (your "cost basis.") The most important word here is "holding," because until you sell a security, your gain or loss remains "unrealized."
Let's say you buy 50 shares of stock at $50 a share. A year later, that share of stock is worth $40. But you're still holding it, so your loss is only “on paper.” If you were to sell your shares at the $40 price, you would then "realize" or actually incur a $500 loss.
By the same token, say your shares increase in value to $60. On paper, you have a $10 per share, or $500 gain. To “lock in,” or realize your gains, you'd need to sell your shares.
Sectors refer to the different areas of the economy in which a company operates. In your FolioFirst account, the following 10 sectors are represented:
Different sectors and companies perform differently at different times. When one sector is doing well, another may be performing poorly. When you spread your investments across various sectors and securities you may reduce your overall market risk, in a process called "diversification."
Pro tip: Check out our pre-built Sample Portfolio in the Trade Center as away to get a start in picking your investments.
Diversifying means that you spread your investing risk across multiple investments, to reduce the chances of any one investment, whether it is a single stock or a single sector, negatively impacting your portfolio.
Let's say you went all in on a tech stock on the news of an upcoming new product introduction. But the product flops, and the stock takes a hit, then so does your investment. You can help mitigate that risk by investing in a mix of sectors and stocks.
Pro tip: You can see how well you're diversified in your FolioFirst account, right from your Dashboard. Just click on My Account on the left navigation, then select Diversification at the top of the window. For an example of a diversified portfolio look at our Sample Portfolio, which is diversified across a variety of sectors and stocks.
Ready to Explore Your Investing Options?
FolioFirst is all about helping you become a smart, confident investor. Log into your account and check out all the tips and tools we've built to help you get there, including how easy it is to buy and sell stocks and ETFs from your account's Trade Center!
Haven't created your FolioFirst account yet? Get started now!
*With a $25 minimum investment. You can learn more about fractional trading and all the other great FolioFirst features in our Help Center.