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I'm a 21 year old living in Sydney Australia, with approximately $10,000 in savings. Instead of leaving this money in my bank account, i'm highly interested in making this grow, i'm not looking for long term investment. I understand the risks involved, and i have been trying to do my reading up online. Although the problem is i am more of a face to face or practical learner rather than reading, and struggle to grasp the concept on how to actually invest. I honestly just can't figure out how to actually start investing. I understand i must open a investment account, which my bank offers although obviously i will look around for other more competitive accounts. From there is where i am struggling to understand what the process is which is basically the beginning. I somewhat understand that a number of years ago the process was to call a broker and buy over the phone, but now there is a online market, and i'm trying to understand where this market is, if its on a single website, numerous websites, on the specific companies website, etc, and how i will actually invest and watch my investment increase or decrease in value. I understand there is a enormous amount of research recommended before buying, looking through cash flow statements, income statements, balance sheets, etc and i have done plenty of reading on the different areas of investment and what each entitles (although still unsure on which would suit my situation best). I understand that this may seem like a random spur of the moment idea, but i assure you it is not, i've been interested in this for the past 4 years, and with no exposure to investing at all in my life and no guidance from anyone i'm struggling to understand all of it on my own through reading, and obviously a full service broker is something out of my budget. I apologise for the lack of knowledge on this subject but would really appreciate the help, even if the response is a 'hold your hand through the process' response i'll greatly appreciate it.
Again i apologise for the lack of knowledge on this subject, i'm sure the society of city-data has much more important things to do than educate a beginner in investing, but i'd appreciate it heaps, thanks.
1) Open a fake money stock account, you can google them. The best way to learn is through practice from my experience. I've been very successful and have never read a book about investing. You will have questions during the process that you can google. For example, when you go to place an order, you will see... bid price, ask price, limit order, market order etc. Whatever you don't understand just search in google, "what is a bid price in the stock market."
2) Think of companies you like and check to see if they are traded on the stock market. Constantly add stocks to your watch list.
Go to Options House and open up an account. They have a virtual trading account and you can fund however much you want but use $10,000 number since this is how much you have. This way you can track how well you do if you had actually invested real money.
If you take that $10,000 & invest it in a S&P 500 fund or etf (Vanguard or iShares have low costs) with dividends reinvested & don't touch it for any reason, just let it sit through good market times & horrible markets, you will be a millionaire by 65 years old even if you never invest again (but you should because you will probably need 2-3 million by that time so add 2-3,000/yr for the next 10 years anyway).
It's called compounding, check it out. The crucial ingredient is time & you have that now. (And if there is a way to invest the $$ in a tax advantageous way for either now or later do that too.)
Another perspective..... Do not buy individual stocks. Do not try to "research" companies and buy their stocks. Buy funds which are well diversified and managed by others. Add to these funds on an on going and regular basis. Go on with your life and forget the ups and downs.
As a young person, the vast majority of your funds should be in stock funds. In the good old days, it might make some sense to put some of your investment into bond funds. Well, bonds pay little and are high risk if and when interest rates increase.
I'm a 21 year old living in Sydney Australia, with approximately $10,000 in savings. Instead of leaving this money in my bank account, i'm highly interested in making this grow, i'm not looking for long term investment. I understand the risks involved, and i have been trying to do my reading up online. Although the problem is i am more of a face to face or practical learner rather than reading, and struggle to grasp the concept on how to actually invest. I honestly just can't figure out how to actually start investing. I understand i must open a investment account, which my bank offers although obviously i will look around for other more competitive accounts. From there is where i am struggling to understand what the process is which is basically the beginning. I somewhat understand that a number of years ago the process was to call a broker and buy over the phone, but now there is a online market, and i'm trying to understand where this market is, if its on a single website, numerous websites, on the specific companies website, etc, and how i will actually invest and watch my investment increase or decrease in value. I understand there is a enormous amount of research recommended before buying, looking through cash flow statements, income statements, balance sheets, etc and i have done plenty of reading on the different areas of investment and what each entitles (although still unsure on which would suit my situation best). I understand that this may seem like a random spur of the moment idea, but i assure you it is not, i've been interested in this for the past 4 years, and with no exposure to investing at all in my life and no guidance from anyone i'm struggling to understand all of it on my own through reading, and obviously a full service broker is something out of my budget. I apologise for the lack of knowledge on this subject but would really appreciate the help, even if the response is a 'hold your hand through the process' response i'll greatly appreciate it.
Again i apologise for the lack of knowledge on this subject, i'm sure the society of city-data has much more important things to do than educate a beginner in investing, but i'd appreciate it heaps, thanks.
This fake account is just what i needed, i didn't realise it was available, thanks heaps guys all your posts helped a lot, and i'll be practising on this fake account a bit before i start using my funds.
keep in mind that while from a technical education trading fake accounts can be a good education, from an emotional side they are very mis-leading.
the human brain hates losing money more than it like making it and that causes very different reactions when you have real money on the line vs hypothetical.
all the plans and strategys that folks have in the back of their head as to what they will do if things start to fall go right out the window. investors typically bail when they should buy and buy when they should lighten up. just the reverse of what good decision making would be.
as mike tyson so correctly stated ,"everyone has a plan until they get punched in the face"
experiments with brain imaging equipment shows in real time very different parts of the brain are actually used when real time decisions with money at risk vs hypothetical were used.
you can read all about these experiments in jason zweigs book your money your brain.
as mike tyson so correctly stated ,"everyone has a plan until they get punched in the face"
Classic line...
And I would add that people should make things simple as possible. Being "in the market" is fun until you don't have time due to "life". I was able to do great things for maybe 7 years... then the last 10, not so much (made money other places).
as mike tyson so correctly stated ,"everyone has a plan until they get punched in the face"
Hahaha!
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