While it’s entirely possible to read up on good investment practices and then jump in, the only way to truly do well is to study the market for an extended period of time. Since learning to invest is largely based on understanding and predicting the behavior of specific companies, it definitely isn’t a skill that you pick up overnight. Additionally, you will also want to make sure that you’re choosing the best stock broker to go with, which is why it’s important to do your research in the beginning before any money leaves your hands – like reading through a Questrade review written by an experienced investor.
Fortunately, there is a way learn the ropes without going broke in the process. It’s called a mock investment portfolio.
So, what exactly is a mock portfolio?
A mock portfolio is exactly what it sounds like – a pretend investment portfolio that you can practice adding stocks to. In fact, you could even think of them as the training wheels of the stock world.
It gives you the ability to add stocks to your portfolio, watch and see how your choices do, and just get a general feel for the way investing works; it’s a good way to familiarize yourself with the basics.
Benefits of a Mock Portfolio
One of the major benefits of using one in the beginning is that it gives you the ability to track, and subsequently predict, the behavior of real companies. You can choose real stocks to track in your portfolio, which means that you can see how well your choices do. Of course, you won’t earn (or lose!) anything from your “investments”, either – but that’s not the point.
Additionally, a mock portfolio will:
- Allow you to track losses and gains in real time
- Give you hands on practice analyzing stocks and other investments
- Let you learn how to create an investment strategy through trial and error
As a side note, it’s a good idea to keep a hold of your mock account even after you move onto using a real investment portfolio.
Where to Setup a Mock Investment Portfolio
When you’re in the initial phases of learning to invest, there are two ways that you can set up a mock portfolio:
- Online through a website that hosts mock portfolio accounts
- At home with a pen and paper
Of course, the online route is preferable over the manual one because it’s less time consuming, and your portfolio gets updated in real time – not whenever you pull out your pen and paper! In most cases, a mock portfolio is completely free to set up, too, so there isn’t very much benefit of choosing to write one up yourself.
How long should I use a mock portfolio?
Until you’re comfortable with the process! In fact, you may end up going back to your it after you’ve learned how to invest – even seasoned investors sometimes use a mock portfolio to test out new strategies! However, once you feel like you’re ready, then you can move on to making real investments with a TD E-series portfolio.
Don’t forget to stay tuned for the next article, which will talk about choosing your first stocks!