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Investing in Stocks and Cryptocurrency for Beginners

Updated: Aug 23, 2022

Investing as a beginner can be very intimidating. But don't worry! We're going to teach you the basics that every beginner investor needs to know. In this post, we'll discuss:

  • The basics of investing

  • Different investment products

  • The importance of investing wisely

  • Different investment platforms

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Ask the average adult about investing, and you’ll probably get a couple of questions back as answers:

‘Why haven’t you already begun?!’, and perhaps more commonly, ‘Where do you even begin?’

To a novice investor, the financial world can be very intimidating. How do you know what to buy? How do you know what to invest in?

It's true that platforms like Mainvest make it easy to invest in growing businesses but what about other, more complicated investments?

The truth is that stocks and cryptocurrency are really just the tip of the iceberg. Other financial products like REITs (Real Estate Investment Trusts) as well as bonds, mutual funds, or ETFs (Exchange-traded funds) often entail less risk and may end up being smarter investments in the long run.

Don't worry, we'll be discussing them too.

Investing 101

If you do a quick Google search for the top investment literature the world has to offer, you’ll notice a startling trend - most of these manuals, while republished in recent years, date back to over 20 years ago. In the case of Benjamin Graham’s The Intelligent Investor, the first draft dates back to 1949 - over 70 years in the past!

To the skeptic, this might make value investing seem like something of a scam, where massive corporations benefit, and the average Joe stands to lose more than he can gain. Why else would the most recommended sources be so woefully outdated?

The truth is that, quite simply, the core tenets of investment have always been the same. “To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks,” are the last lines in Graham’s legendary investment manual, and for good reason.

However, while the inherent psychology behind investing hasn’t changed much in the last 100 years, the infrastructure surrounding it has and dynamically at that. Where we once had stockbrokers frantically running between monitors and telephones, we now have infinitely efficient algorithms in place - capable of dealing in millions of transactions each minute.

Add to this the still-nascent potential of cryptocurrency, and you’ve got a world that even Graham couldn’t see coming.

However, don’t be alarmed. Despite the massive complexity of today’s stock and crypto options, technology has made investing easier than ever before.

In this guide, we’ll first introduce you to the basic concepts of stocks and crypto, explain how their markets work, and explain their core differences.

We’ll also recommend great investment tools to get you started and give you an idea of how to approach investments in a way that’s stress-free and sustainable.

Take note: This is not a guide to instant success - all of those are generally disreputable. What we will help you with is decluttering the ocean of information presented to a first-time investor, and give you the tools and basic knowledge you need to build a portfolio.

Ready? Let’s get started:

Why Is It Called a ‘Stock Market’, Anyway?

The etymology of stocks tells us an interesting story - one that closely links stocks to the mother of all financial instruments - debt.

Anthropologist David Graeber, in Debt, draws on early British documentation to find the source. Back in the 1000s, King Henry I of England’s government accepted a rather unique form of debt records. “One of the most important forms of currency in England in Henry’s time were notched “tally sticks” used to record debts,” Graeber explains.

“Tally sticks were quite explicitly IOUs: both parties to a transaction would take a hazelwood twig, notch it to indicate the amount owed, and then split it in half. The creditor would keep one half, called ‘the stock’ (hence the origin of the term ‘stock holder’) and the debtor kept the other, called ‘the stub’ (hence the origin of the term ‘ticket stub.’)”

Thankfully, technology has given us much better ways of tracking finances than a bunch of sticks - so let’s fast forward through a few centuries.

How Do Most Modern Investments Work?

The average investor certainly isn’t lacking in choice in today’s market. Cryptocurrency is only the latest in a long line of financial products designed to generate wealth over time. Here’s a quick primer on a few popular choices:


In simple terms, a stock is a financial instrument that entitles its owner to a part of the profits and assets of a public corporation. The individual units of stock that you can purchase are called shares. Stocks are also referred to as ‘equity’.

When you hold a stock, the company has surrendered a fraction of themselves in debt to you - letting you earn money in the forms of capital gain and dividends.

Capital gain refers to an increase in the value of an asset, such as a stock, cryptocurrency, or even real estate. When an investor buys, say, 500 shares of a stock at $5 each, they have made a capital expenditure of $2,500. A few months down the line, the share price has increased to $7 per share - making the investment worth $3,500. If the investor chooses to sell now, they will receive a capital gain of $1,000 (3,500-2,500).

Dividends, on the other hand, allow a company to share its growth with the shareholders who have invested in it, by giving them a payout at regular intervals. This makes it a popular investment for people who want to secure a retirement fund - most U.S. dividends send cash directly to your account depending on how many shares you own.

The amount and frequency of these payouts are decided by the board of directors of the company.

What Is A Market Index?

Before we continue, it’s important to address some of the most important figures in the world of modern finance - market indices.


Bonds are loans that you make to a variety of different organizations, ranging from corporations to national governments, and even individual cities. In return for upfront cash, a bond requires that the debtor pays you regular interest over a specified term and repays the principal amount by the bond’s maturity rate.

Similar to stocks, bonds also carry a certain degree of risk - although this depends on the degree of bankruptcy the debtor faces, wherein they cannot return your money on time. Corporations (corporate bonds) can have high levels of risk - 2020 saw over 340 companies declare bankruptcy due to COVID-19 troubles - negatively impacting their bondholders as well.

What are U.S. Security Treasuries?

On the other hand, several investors keep a chunk of their investments in government bonds such as treasury securities, as they’re among the safest investments you can possibly make - backed by the ‘full faith and credit’ of the U.S. government. Also collectively known as ‘treasuries’, they come in three forms:

  • Treasury Bills: Short-term bonds that can last from a few days to 52 weeks. These can be owned at a discount - holders receive interest + principal when the bills mature.

  • Treasury Notes: These are medium-term investments that last for two, three, five, seven, and ten years. Holders receive semiannual interest payments.

  • Treasury Bond: The mother of all government-backed investments, these are long-term treasuries that last from 10 to 30 years, with semiannual interest payments.

All treasuries have an additional benefit - they’re exempt from state and local income tax (but subject to federal tax).

Mutual Funds and ETFs

Most novice investors, while eager to grow their money, can be clueless about where to actually place their investments - many of us lack the business acumen and research capabilities to make truly informed decisions.

Fortunately, we can all pay someone to take care of that problem. Both mutual funds and ETFs (Exchange-Traded Funds) work on the concept of pooled fund investing, where an experienced trader or trading house collects funds from various people and invests them in a diversified portfolio - you’ll often see between 100 - 3,000 different stocks represented in the makeup of both ETFs and mutual funds.

What’s the difference between ETFs and mutual funds?

Both are largely similar. The main difference is that ETFs can be quickly bought and sold like regular stocks, and are tied to generally stable index values - mutual funds are slower to work with and more expensive. But they are subject to much more research and oversight - making them a good choice when wanting to invest in niche, upcoming sectors where knowledge goes a long way.

While the trader makes a cut on the collective profit, these are good options for people looking to avoid the stress of keeping up with financial news and trading lingo.


Another example of pooled fund investing that’s gained traction in recent years is REITs or Real Estate Investment Trusts. These companies pool together money from several investors to finance, own, or manage real estate properties.

In turn, investors receive dividends from the company and are free from the risk and entrenchment associated with directly buying or selling property.

While profit is made through interest on real estate investments and property sales, most REIT income is generated when the company puts out its real estate for rent. For example, a REIT may use investor funds to own 20 apartment complexes with 100 tenants each. If each tenant pays $1,500/month as rent, the REIT earns a slick $3,000,000 per month.

After deductions in upkeep and other business expenses, this money gets divided amongst all the REIT’s shareholders.

Some of the more popular REIT companies on the market today are:

Overall, trust investing is one of the better ways to grow your money.

Don’t worry; we’ll get to Crypto soon enough - it deserves its own section.

What Is Portfolio Diversification?

If you’ve done any light reading on investing, chances are that someone has told you to keep your portfolio ‘diverse’. What does this mean, and why should we do this?

For starters, your standard investments, even including crypto, fall broadly into categories known as ‘asset classes’ - various groupings of investments with similar traits and market temperaments.

Some of the common asset classes are:

  • Stocks/Equities

  • Bonds

  • Cash/Cash equivalents

  • Commodities

  • Real Estate

  • Cryptocurrency

By diversifying your portfolio, you are simply choosing to spread your investment across a wider variety of asset classes. Ever heard the phrase - do not put all your eggs in one basket?

In the case of massive downturns, diversification provides a buffer against major economic losses. Let’s say that your portfolio consists of 50% stocks and 50% real estate. If the stock market crashes, you lose close to 50% of all your investments.

On the other hand, investing say 25% of your money in stocks and the rest in a wider selection of financial instruments will limit your losses and help keep your investment relatively healthy through rough financial periods.

Why is Investing Important?

All of this sounds great - but why should anyone bother putting money in the hands of an organization, anyway? Isn’t it safer tucked away in a locker? We disagree - here’s why:

Beating Out Inflation

The prime value of investing lies in beating the effect of inflation. You may have found that your parents and older folks might reminisce about how expensive gasoline is today, compared to their youth. There’s a lot of truth behind this - the price of gasoline has and continues to skyrocket. It isn’t just gasoline either - across the board, inflation has caused the value of the dollar to decrease.

This means that money kept stagnant in a locker will bleed value over time.

Suddenly the idea of letting your money sit around doesn't sound like such a ‘safe’ solution after all, does it?

But what about banks?

Even the best savings account interest rates rarely cross over 0.5% per annum, making little more than a minor dent in the current US inflation rate of over 4%. This means that you need more powerful gains to make sure you don’t lose money - that’s where stocks come in.

If you choose to invest in equity, you can safeguard your money by watching your investment grow at a higher rate than that of inflation. While there is a certain degree of risk, stocks offer much higher returns - a steady 10% average gain across the last 100 years, which is more than enough to combat inflation.

Understanding How Income Works

There are millions of ways to earn money, but only two broad subcategories when it comes to income. These are:

  • Earning an income, either by working for yourself or an employer.

  • Growing assets through investments.

The biggest difference is that while investing requires money, the former requires a much more important resource - time. You only have 24 hours in a day, so relying on investments instead of more paid work can allow you to grow your income passively without eating into your everyday commitments.

The Power of Compounding

The beauty of investing early lies in how you can use shares for exponential growth.

Let’s say that you invest $10,000 in shares, assuming an interest rate of 8% per year. If you add in a monthly contribution of $750 and hold the fort, your money will cross the $1,000,000 mark in under 30 years - setting you up comfortably for retirement, entrepreneurship, or your family’s future.

That’s what compounding gets you - massive gains over time that help secure immense financial freedom.

Taking an Active Interest in Big Business

While many of us are simply looking at stock investing as a means to an end, there’s plenty to learn from the process - especially if you have a keen interest in certain sectors and companies.

Owning stocks allows you to own a piece of a company you support and love, while also giving you a say when it comes to major business decisions. As an investor, you will have the right to vote remotely on major issues leading up to shareholders’ meetings.

You will also be privy to shareholders’ letters, in which you may receive fascinating insights and information from the top management.

Arming yourself with more industry knowledge and shareholder wisdom is the right way to go if you’re looking to make big profits on Wall Street.

How Much Should I Invest?

If this is the next question you’ve got on your list, you’re beginning to think the right way.

Several ill-informed ‘investors’ will simply tell you that you should invest ‘whatever you can’, although this can be a recipe for disaster. If you invest too little, however, you could also find yourself falling behind over time.

Finding the sweet spot isn’t a matter of random judgment - the biggest factor in play here is your life, and what you wish to accomplish in it. To better understand this, ask yourself the following questions:

  • How much passive income do you want each year from your investments? What will you do with this money?

  • How much risk are you willing to take? The more aggressive your investment plan, the more risk of loss comes into play.

  • When will you need to liquidate your investments? Are you looking to use this money to build a business in your 40s, travel the world in your 30s, or simply fund a grand retirement home?

  • How much are you willing to cut down on daily expenses to reach your monthly investment goals?

These are deep questions about your present and future, and they may be hard for a first-timer to answer - nevertheless, sit down with a trusted parent, partner, or advisor to determine what your financial needs and expectations truly are. Remember that you are not simply growing money for its own sake - you are trying to fund life goals for yourself and your loved ones.

If you’re looking for a textbook answer, consider saving around 10-15% of your annual income.

Getting Started: Top Investing Platforms for Novices

Before setting aside your savings for investment, the very first thing you need to do is open a brokerage account. You may need to upload some basic financial information such as bank account details and personal identification, once you register.

We also recommend brushing up on the latest market trends by reading some of the more popular investment publications such as The Mindful Trader or The Motley Fool.

The following is a list of all online-based, highly-usable broker software platforms that can be accessed through PCs as well as mobile devices - and allow for a wide variety of investment types.

One of the most popular online brokers in the United States, TD Ameritrade offers not just a wide range of commission-free investments to get into - it also has one of the best educational suites to help answer questions and guide newcomers.

Don’t think that it isn’t veteran-friendly either - once you learn more, you can use its extensive ‘thinkorswim’ platform to conduct market research and chart your investments across several metrics.


  • Great analysis tools, several investor-savvy news updates

  • Education suite helps new investors learn more about different asset classes

  • Great online support team


  • The platform has an overwhelming amount of content, which could be better organized.

  • History of server-side issues and outages in 2020

After a major revamp in 2019, E*Trade slashed commissions down to $0, making it one of the most popular and well-rated brokerage options on the market.

The company has also invested heavily in making powerful yet accessible apps for both desktop and mobile - that takes every kind of investor into account.


  • Two types of mobile apps - designed for both straightforward investing and high-detail research approaches.

  • Allows you to quickly jump into the market with ‘Prebuilt Portfolios’


  • No international trading.

  • Cannot incorporate data from outside accounts.

Geared towards younger first-time investors, SoFi aims to make investing as pain-free as possible - they accomplish this through a combination of minimal fees, low minimum trade volumes, and most of all, a robust and highly capable algorithm.

The system itself is highly proficient and based on MPT - the theory that resulted in the 1990s Economic Sciences Nobel Prize. It’s a great option for those looking for minimal research effort and maximum returns.


  • Great goal planner software

  • Very affordable

  • Free access to financial advisors


  • Focused mostly on a handful of ETFs, with very little outside choice

  • No control over trading activity

REIT Investment Platforms

As REITs deal entirely in real estate, you generally won’t find them bundled into most brokerage platforms. Here are a few of the best ones to get started, if you’re looking for a smarter way to crack into the real estate market.

EquityMultiple connects accredited individuals with high-quality, expertly screened real estate investments, starting at just $5k, through a streamlined platform.

Although they're one of the more expensive REITs in our lineup, they have a very impressive track record and they only focus on high-value properties.

Of all the REITs on our radar, Equity Multiple seems to be the safest and most lucrative option.


  • Diverse offerings

  • Superior track record

  • Excellent investor support

  • Distributions take place either monthly or quarterly


  • High minimum for new accounts ($5k)

For direct access to individual commercial real estate investment opportunities, YieldStreet is one of the industry leaders. They also offer managed funds and advisory services for investors who prefer to let the professionals work their magic.


  • Multiple investment options, including Funds & Vehicles, Individual Deals, and Tailored Portfolios

  • Largest and most diverse commercial real estate marketplace

  • Excellent investor support


  • No early withdrawals

  • Payout only occurs when the investment matures

With a massive variety of commercial and residential properties to invest in, RealtyMogul has built a healthy body of over 200 thousand investors in its first decade in the business. The company has built a strong reputation for high-grade quality control - their experts assess every single listing in person, and stay away from inexperienced, untested real estate partners.


  • Great variety of real estate investments

  • Razor-focused on providing quality properties

  • Allows for passive income as well as growth opportunities


  • Each investment has varying fees

  • Long hold periods, so your investments are harder to liquidate

Most REITs simply connect brokers to properties. Instead, Diversyfund takes a much more hands-on approach. It buys, manages, and develops a selection of properties - before consolidating revenue and sending each investor their share. They also provide a great newsletter, providing easy-to-understand guides on personal finance and the world of real estate investment.


  • No management fees

  • A robust mobile app interface

  • Low minimum investment of $500


  • Since the focus is on developing a specific real estate portfolio, you have fewer investment choices

  • No early withdrawals

  • Delivers payout only when the investment matures

Now that we’re done with the most recognized investments, let’s move to something a little more unique and interesting.

The Rise of Cryptocurrency

What began with a mysterious anonymous launch in 2009 has now become front-page news across the financial world - Cryptocurrency or Crypto has become a raging success and cannot be ignored by anyone new to investments.

Explained as simply as possible, cryptocurrency is a 100% digital/virtual currency that is almost impossible to forge or counterfeit, owing to its innate cryptography, or data encryption. This functions across what is called the blockchain - a decentralized digital ledger that uses the processing power of millions of computers across the internet to function.

While there are several different kinds of crypto options out there, the oldest and most valuable is Bitcoin or BTC, which constitutes around 60% of all crypto in circulation. At the time of publishing this guide, Bitcoin is valued at $35,627.68 - and owned by an approximated 46 million Americans.

While there are several crypto exchanges out there, we recommend Coinbase - a reputable, highly-rated, and well-designed all-rounder platform.

Cryptocurrency Vs. Stocks

You might have heard the stories - thousands of early investors making millions of dollars with early investments in crypto.

While there certainly is a lot of money to be made with savvy investments, crypto also comes with unique challenges and barriers to entry that few other investments pose.

General Acceptance

From just a single cryptocurrency in 2009 to over 5,500 recognized in 2021, crypto has picked up with tremendous scaling and has been backed by some governments, major investors, and even Tesla CEO Elon Musk. This, however, doesn’t extend far beyond bitcoin - other than Ethereum, barely any cryptocurrencies see large-scale trading volume and value appreciation.

On the other hand, stocks have been in effect for several decades, are universally recognized, and most importantly, supported by governments all around the world.


All stocks and similar financial instruments must be issued through an IPO (initial public offering), and pass through dozens of checks before a major stock exchange approves and makes them available for trading. However, after selling their initial shares, companies on a stock market can keep issuing more indefinitely - leading to diluted stock value over time, similar to how printing money leads to currency devaluation.

On the other hand, crypto can be issued by anyone and any organization, provided they have the tools and know-how. Almost all crypto is issued with a hard-coded maximum supply - meaning that over time, crypto will grow scarcer and increase in value.

Market Manipulation

2021’s Gamespot short squeeze is a massive topic to dive into all by itself - but for the sake of brevity, we’ll take note of how it pointed out a much-ignored truth about Wall Street - that stock market traders, political figures, and insiders will game the system to hold control over their profits.

Crypto, on the other hand, is entirely driven by retail investors and is highly decentralized. This means that massive corporations and governments cannot rig the game against small-time investors looking to invest in a radical new technology.

Trading Time Frames

A relatively minor factor, but one worth mentioning. Stock markets work based on session hours - the New York Stock Exchange (NYSE), for example, opens at 9:30 A.M. and shuts at 4:30 P.M. This means that if you want to place a shares order after market hours, you’ll have to wait for the next day for it to get processed.

Crypto works 24x7 - allowing you to invest whenever you wish.

Risk Levels

Compared to bonds and savings returns, both crypto and stocks are highly volatile and subject to market risks.

That said, even high-end volatile stocks perform less erratically than crypto, which fluctuates with massive 30% upswings and downswings within days.

This can be counterbalanced with a sound crypto investment strategy that requires diligent research, experience, and a willingness to accept risk.

Overall Performance

Perhaps the biggest reason why crypto has gained so much media attention in the last five years is its skyrocketing rise in value - compared to stocks, crypto has outpaced stocks by a factor of 10:1 - an unheard-of prospect across the history of investing.

Take 2020’s figures alone - crypto rose by 495% last year, compared to 31% with the Nasdaq 100 index.

The Bottom Line

So, should you invest in crypto or stocks? The answer, if you’ve been paying attention, is both. By diversifying your portfolio, you allow yourself to avoid tying your future to a single risky asset - and instead, allow yourself to maximize profits and learn from investing in several spaces, sectors, and platforms.


How do I open a brokerage account?

The platforms listed above will have a registration section on their website. Generally, all you need to do is provide identification and bank details so that money can flow out of and into your bank account. Once accomplished, the platform will process your application and should soon allow you to pick, measure, and invest.

What is a market index?

A stock market index is a hypothetical portfolio of various stocks, grouped to provide a rough estimate of the performance of a stock market.

You’ve probably heard of the terms NASDAQ, S&P 500, Dow Jones Industrial Average, and more - these are all the names of various stock market indices. NASDAQ, for example, is an index comprising 2,500 important stocks, ranging from tech fields to REITs, healthcare, and financial organizations.

To a common investor, they are useful as a metric for index funds - which aim to emulate the performance of a particular stock index.

Can I invest a small amount, say $10, in stocks and crypto?

When it comes to stocks, not necessarily. While there are several sub-$10 picks to choose from, the vast majority of stocks worth investing in will cost more than $10 - you can technically buy ‘half a share’, but these are not easy to trade with.

Crypto, on the other hand, has no fixed minimum limit. You can easily buy tiny fractions of a Bitcoin, although this is not advisable as you will be charged a cut per transaction on most exchange platforms.

What Are Bearish and Bullish markets?

Near the New York Stock Exchange, you’ll find a statue of a charging bull - symbolizing the upward trending sentiments of Wall Street traders. When a market is called ‘bullish’, it simply means that it is performing well, and your investments are rising in price.

Conversely, a ‘bearish’ market moves downwards, with stock prices falling and bottoming out.

Generally speaking, you stand to make money with existing stocks in a bullish market, while a bearish market is the right time to get your hands on a stock that may become expensive in the future.

How much do I invest to make $1,000 in dividends?

Like everything else in the world of stocks… it depends on what you invest in.

To keep things simple, however, let’s take the example of the IBM stock, which has the following figures as of the 28th of May, 2021:

  • Stock price: $143.67

  • Annual dividend payout: $6.56

Basic math tells us that we need to buy about 153 shares to make $1,000 in yearly dividends - which will cost us roughly $21,982.

If you’re looking to make things more ambitious and earn $1,000 each month through dividends, you need to buy around 1,818 IBM stocks - a $261,192 investment. Better start sooner than later, eh?

We hope that this guide has helped clear the air and make your introduction to investing a little bit easier. If you'd like to learn more about investing, we recommend enrolling in Yale University's Financial Markets course, offered by Coursera.

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