37% of Americans Don't Own Stocks. 3 Easy Ways to Become an Investor Today.

If you've decided the stock market is a rich man's game... well, there's actually bit of truth to the idea. The wealthiest 1% of families living in the United States own about 50% of the entire U.S. stock market, while the richest 10% of the country's households own about 87% of all its stocks. The other 90% of people living in the United States are collectively holding the other 13% of the stock market's total value of around $60 trillion. But not even all of those families are equity investors. As the Motley Fool's in-house research arm highlights, 37% of Americans -- or roughly 40 million households -- don't own any stocks at all.

Don't be too quick jumping to conclusions based on these numbers though. In many ways, they paint a misleading picture of what non-investors could be doing and arguably should be doing. Although you may never join the 1%, you can still tap into the reasons why they're so heavily invested in the market.

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How to start investing

Rich investors make a point of making the most of their money. That usually means owning stocks, plugging them into an average inflation-beating annual gain of about 10%.

That doesn't mean the market dishes out a 10% gain each and every year. Sometimes it does even better. Other times it does worse. Every now and then it even loses ground. But most investors understand that if they're patient enough, they'll reap a long-term reward on the order of 10% per year.

But doesn't it take money to make money? Again, there's some truth to the claim -- just not nearly as much as non-investors might think. You can get started for less than $1,000; in some cases, you can invest as little as $100 per month. While your absolute returns certainly won't rival those of much bigger investors, you'll still be earning the same basic rate of return on your money that they are on theirs. Given enough time and patience, a few hundred dollars per month can grow to a few thousand dollars. In time, a six-figure stash is possible by investing just a few hundred bucks at a time.

The proverbial million-dollar question, then, is how does someone who's never owned stocks before get started? Here are the top three ways to join the club, so to speak, in their suggested order.

Read the right books

The last thing many people want to do -- or have time to do -- in their adult life is study. Like acquiring any other skill or knowledge set, teaching yourself the ins and outs of investing by reading the right books is the ideal place to start. And good news! Most of these books aren't textbooks as much as they're common-sense, easy-to-read chats.

As for which books, there are plenty of good ones for first-time investors to consider. If you're looking for specific recommendations, however, Albert Alan's The Intelligent Investor, John Bogle's Common Sense Investing, and The Motley Fool Investment Guide by the Motley Fool's founders David and Tom Gardner are all good options.

Observe

In addition to giving yourself some basic investing training, you should observe everything from printed media to the internet's market-based commentary to cable television's financial news channels.

That doesn't mean you'll necessarily want to do anything with the information you get. Indeed, the whole point of observing without acting is to recognize there's an awful lot of information, but very little of it means much in the long run. In fact, the commentary is often dangerously short-term minded. Realizing this will eventually allow you to sift out all of the unimportant stuff rather than be intimidated by the sheer volume of it.

Enroll in your employer's 401(k) plan

Once you're comfortable enough with how the market works, it's time to put your knowledge into action with real money. Presuming you're one of the 73% of U.S. residents with access to workplace retirement benefits, this is the best place to start. Speak with your human resources (HR) department and tell them you'd like to enroll in what's most likely going to be a 401(k). (If not a 401(k), your employer's HR staff should be able to steer you into an equivalent retirement plan.) This option is handy simply because your company can automatically deduct a portion of your paycheck and put it into your retirement account on your behalf.

Just bear in mind that you'll be asked what you specifically want to invest in as your contributions land in this account. Your options are likely limited to mutual funds, but you'll still want to have a well-thought-out plan before making this choice. (More on this below.)

Open a brokerage account or an IRA

But what if your employer doesn't offer retirement benefits, or you just want to do your own thing? That's an option too. You can open a brokerage account or individual retirement account (IRA) with a broker like Charles Schwab or Merrill Lynch.

These two different kinds of accounts each have their strengths and weaknesses. Gains made by investments held in brokerage accounts can be taxable year by year, for instance, but there's no limit to how much money you can deposit into them. IRAs, conversely, grow tax free, but there's an annual contribution cap.

Either way, both kinds of accounts can be used to purchase the exact same investments whether you're looking to hold stocks, mutual funds, or bonds.

Funding these accounts is usually done with a check or bank transfer.

Pick your investment(s) and place your trade(s)

Finally, once you've got an account funded, the final step is making an investment of your otherwise idle cash.

For 401(k) accounts, your investment in its mutual fund options are almost always automatic per your instructions when you elected to participate in the plan. That's why you'll want to have an allocation in mind once you begin salary deferrals into these accounts.

Brokerage accounts and individual IRAs are a little bit different. Although it's possible to set up recurring deposits into both kinds of accounts and automate an investment in a mutual fund with this steady stream of cash, more often than not they'll simply be holding idle deposited money. Buying stocks or funds with this money is actually rather intuitive when done online, but you can also speak with a live representative if and when you need a hand.

The one thing that many new investors don't always "get" with a brokerage account or IRA is that everything happens within the account itself. That is to say, when you make a purchase of a stock or mutual fund, that amount of cash is automatically swapped out for the investment you're buying. Then that investment sits side-by-side with whatever cash remains in the account. Any future sells add their proceeds back to the amount of cash held in the account.

Once you're at this stage, the hardest part is just remembering this is a long-term venture. Don't sweat the occasional setback in the value of your portfolio. If you've picked the right investments, you can ride out these rough patches.

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Charles Schwab is an advertising partner of Motley Fool Money. James Brumley has no position in any of the stocks mentioned. The Motley Fool recommends Charles Schwab and recommends the following options: short March 2025 $80 calls on Charles Schwab. The Motley Fool has a disclosure policy.