How to invest in stocks: potential earnings and first steps for beginners

Find out how much you can earn from stocks, how to learn to invest, where to start investing, and what is best to invest in. Here is a complete guide for beginner investors.

Investing has long ceased to be a tool only for professionals. Today, anyone can buy stocks—through a brokerage app, with a minimal amount, and without complex operations. However, before you begin, it’s important to understand: why do it, what options are available, how investing differs from other ways to earn money in the market, and most importantly, how much you can earn from stocks.

Beginners often confuse investing and trading. At first glance, both involve working with stocks, charts, and money. But the goals and approaches of these strategies are different.

Investing and trading: what’s the difference?

An investor buys assets to hold them for a long time, months or years. They don’t rush to sell on the first dip. Their goal is to grow alongside the business. This approach relies on company analysis, diversification, and patience.

A trader is someone who profits from short-term price fluctuations. They may buy and sell an asset multiple times a day. This path requires more time, experience, and skill. The risk is higher here, as is the potential profit. But achieving consistent results without preparation is difficult.

If you are just learning about the topic and are not ready to spend hours in front of a screen, it is wiser to start with investing. It allows you to move calmly and gradually, without turning it into a job.

How much can you earn from stocks?

The answer to this question depends on many factors: which stocks you buy, your investment horizon, how you allocate assets, and your risk tolerance. But even so, you can rely on historical data to get a general idea. This is especially useful if you are just learning about investing and want to understand where to begin.

Average stock market returns

One key benchmark is the S&P 500 index, which includes 500 of the largest publicly traded US companies. As of 2025, the index's historical average return is approximately 9.5% annually, including reinvested dividends. This figure is based on over 90 years of data (from 1928 to present).

Index returns are not consistent: in some years it may gain 20-30%, while during crises it can lose 10-40%. For example, the index dropped 19% in 2022, but then rebounded in 2023 and 2024. Such fluctuations are normal market behavior and should be considered when learning how to invest wisely with realistic expectations.

Examples of individual companies' returns

Stocks of individual companies can deliver higher returns compared to the index, but they also come with greater risk. Below are several examples of US companies with different performance trends over the past 10 years.

Apple Inc. (AAPL)

From 2015 to early 2025, the stock grew approximately 6.5 times (accounting for splits and dividends), corresponding to an average annual return of about 20%. The company has consistently increased its profits and dividends, remaining a key player in the technology sector.

Microsoft Corp. (MSFT)

Over the same period, the stock gained over 500%, including dividends, averaging around 18% annually. Microsoft has successfully expanded its cloud services and artificial intelligence offerings, driving demand for its shares.

Nvidia Corp. (NVDA)

Since 2015, the company's stock has surged more than 20-fold, particularly amid the AI boom starting in 2023. The average annual return over 10 years exceeded 35%, though the stock remained highly volatile, especially in 2018 and 2022.

It is important to note: while such returns are possible, they come with significant risk. For instance, in 2022, many technology stocks plummeted 30–60% within just a few months. Therefore, if you are considering where to invest, start with analysis and diversification—not by hunting for a single "star" stock.

Why long term matters

Compound interest is the fundamental tool for capital growth. Even with an 8-10% annual return, regular reinvestment accelerates your profits year after year. This becomes especially crucial if you start investing in your 30s or 40s and are prepared to commit to a 15-20 year plan.

Example:

A $10,000 investment growing at 9% annually would become approximately $56,000 in 20 years without withdrawals. By adding just $500 monthly, the total would exceed $300,000. This effect only works through consistency and discipline.

Understanding compound interest represents one of the foundational steps when learning how to invest and build a strategy anchored in long-term goals.

Risks: key considerations

The stock market offers no guaranteed returns. Mistakes in company selection, overconcentration, emotional decisions, or poorly timed entries can all lead to losses.

Common mistakes by beginner investors:

• Buying stocks at peak prices without analysis
• Lack of diversification (investing in just 1-2 companies)
• Selling on the first price dip
• Chasing short-term gains instead of following a strategy

If you want to understand how much you can earn from stocks, it is crucial to consider not just potential returns but also risks. Profit always results from balancing reasonable expectations with an understanding of market behavior.

How to learn investing: step by step

If you want to navigate the stock market with confidence, it is important to proceed gradually. Investing requires understanding your goals, basic instruments, and risk management principles. Here is where to begin to avoid common mistakes and learn how to invest from scratch.

Step 1: Define your investment goals

Before choosing instruments and strategies, answer a simple question: why are you investing? Possible options include:

• Saving for retirement or passive income
• Planning for a future apartment purchase
• Building an education fund for your child
• Simply aiming to grow savings and hedge against inflation

Your investment goals directly influence your investment horizon, acceptable risk level, and approach to asset selection. For instance, if you are investing for 20 years, you can comfortably focus on stocks. For shorter-term goals of 3-5 years, it is better to balance your portfolio with bonds to reduce volatility.

Goals serve as the foundation that shapes everything else. Without them, it is difficult to determine where to invest or how to measure success.

Step 2: Master the basic concepts

The stock market is not as complicated as it might seem. But to start confidently, you need to understand key terms. Here are the fundamentals:

• Stock is an ownership share in a company. It provides rights to profit sharing and capital growth as the business value increases.
• Bond is a debt instrument. It generates fixed income but with lower growth potential.
• ETF (Exchange-Traded Fund) is a ready-made portfolio of stocks or bonds available through an exchange. Example: the S&P 500 fund.
• Broker is an intermediary between you and the exchange. Through brokers, you buy and sell securities.
• Individual Investment Account (IIA) is a special type of brokerage account in Russia with tax benefits (not mandatory for non-US residents investing in dollars).

Understanding these concepts is essential if you want to consciously manage your capital rather than simply deposit money. If you are wondering where to start investing, begin with market terminology and operating principles.

Step 3: Choose a broker and open an account

To buy stocks, you will need a brokerage account. It is similar to a bank account, but designed for securities transactions.

Key factors to consider when selecting a broker:

• Reliability and licenses: The broker must operate under regulatory oversight (in the US - SEC and FINRA). If you are investing in foreign assets through Russian platforms, ensure the broker provides direct access to US exchanges.
• Fees: It is crucial to understand what you will pay for trades, account maintenance, and currency conversion.
• Interface usability: It is especially important for beginners. Platforms with simple, intuitive dashboards are preferable.
• Available instruments: If you plan to invest in US stocks and funds, verify their availability.

Choosing a platform is a technical but crucial step that directly impacts your comfort and efficiency. To truly understand potential stock market earnings, you must account for both returns and expenses.

Step 4: Start with small amounts and a simple portfolio

You can invest wisely even with minimal amounts. What matters is not the size, but the consistency and structure.

For beginner investors, a simple portfolio works best:

• 70-80% in broad US market ETFs (e.g., S&P 500 or Nasdaq 100 funds)
• 10-20% in individual blue-chip stocks (Apple, Microsoft, Johnson & Johnson)
• Remaining 10% in cash or short-term bonds

This structure balances growth and stability, allowing market participation while reducing risk through diversification.

Why this matters: Even strong companies can temporarily decline. In 2022, Amazon dropped by more than 40% despite its solid business. That's why one of the first investment lessons is: never put all your eggs in one basket.

Regular investing is equally crucial. By purchasing assets monthly, you smooth out market volatility. This strategy suits most individual investors, especially for long-term growth.

When you are just starting out, don't chase maximum returns. Instead, focus on understanding where to invest best, how to reduce risks, and how to build disciplined habits. This is the true foundation for long-term success in the stock market.

Where to learn about investing?

The stock market is an area where it is better to first understand the basic principles before making decisions. Fortunately, there are now many resources available to help beginners. The key is to filter information carefully, as not all materials are equally useful and reliable.

Where to begin your learning

If you are wondering how to learn investing, start with the simplest and most trusted formats:

Investment books

They are a reliable source of fundamental knowledge. A great starting point is The Intelligent Investor by Benjamin Graham, a classic recommended even by seasoned professionals. Also valuable is Thinking, Fast and Slow by Daniel Kahneman. While not about stocks, it excellently explains how investor psychology works.

Educational courses

Consider courses from reputable platforms: Coursera (offerings from Yale, University of Michigan), Khan Academy, and platforms like Investopedia Academy. These provide both academic foundations and practical knowledge.

Official resources

For example, the US Securities and Exchange Commission (SEC) website offers educational materials for individual investors. This is particularly important if you want to understand not just where to invest, but also how to protect yourself from fraud.

What to watch and read regularly

Market understanding develops over time. That's why it is important not just to learn from books, but also to follow current developments:

Financial media: CNBC, Bloomberg, Wall Street Journal.

These are key sources for those investing in US assets. They publish news, analysis, and insights from leading experts.

Analysis from asset management companies: Vanguard, Fidelity, BlackRock.

On these companies' websites, you will find research, market overviews, and basic investment strategies. This is particularly useful if you want to understand where to start investing with a focus on index funds and a long-term approach.

Practical YouTube channels

For example, Ben Felix's channel offers concise yet in-depth explanations of key concepts, from risk to diversification. It is important to choose creators who rely on data rather than promising "get rich quick" schemes.

How to navigate information overload

The more you read, the higher the chance of encountering conflicting advice. To avoid confusion, follow these principles:

• Study fundamentals rather than "beat-the-market" strategies;
• Verify sources and do not rely on emotional appeals;
• Compare data rather than follow unsupported "expert opinions."

If your goal is to understand how much you can earn from stocks and how the market actually works, steer clear of emotionally charged recommendations and dubious sources. The foundation lies in a systematic approach and sober evaluation of facts.

Key reminders for beginner investors

Investing is not a one-time transaction or a game of chance. It is a process requiring a systematic approach, patience, and understanding of fundamental principles. To achieve sustainable rather than random results, keep these crucial points in mind:

1. Investing is not a get-rich-quick scheme

While the stock market can deliver substantial returns, this only happens over the long term. Chasing quick profits typically leads to mistakes and losses. Historically, S&P 500 investments yield about 7-10% annually, already outpacing inflation and bank rates, but incomparable to "fast money."

When evaluating potential stock market gains, focus on extended periods, 10 years or more. This allows you to harness compound interest and averaging.

2. Discipline determines results

Consistency proves fundamental to success. Keep investing according to your predetermined plan, even during market downturns. Your strategy should stem from goals, not emotions. By monthly investing fixed amounts in index funds, you mitigate market volatility and enhance outcome predictability.

For beginners, this approach offers the clearest path to learning investment fundamentals and building confidence in your decisions.

3. Emotions are your worst market enemy

New investors often make emotional trades: buying stocks at peaks and selling during dips. This behavior leads to losses. Market fluctuations are inevitable: even the most stable companies occasionally drop 20-30% in value. This is not cause for panic if you understand what to invest in and why you hold these assets.

Cold calculation and a predetermined plan are your best defenses against impulsive decisions.

4. Commit to continuous learning

Financial markets evolve constantly with new instruments emerging regularly, yet fundamental principles remain. Read, listen, and analyze. Even experienced investors keep learning. This becomes particularly crucial when you aim to develop a deeper understanding of where to begin investing, how to manage risks, and how to build a portfolio that aligns with your financial goals.

5. Mistakes are part of the process

You might choose the wrong asset, underestimate risks, or miss opportunities. This is normal. The key lies in learning from errors rather than ignoring them. Start with small amounts, test strategies, and analyze outcomes. Experience becomes your most valuable tool, particularly when combined with proper risk assessment and sound methodology.

Conclusion

If you approach investing with intelligence, patience, and willingness to learn, the stock market can become a reliable tool for growing your capital. Start simple, stay focused on your goals, and progress step by step. Then the question "how to learn to invest" transforms from frightening to comprehensible and manageable.