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I'm reading through the threads and there's so much contradiction. How does one go about learning about investing - and I'm talking about from level 0? I love to read but how do I know who's reputable and who's not? Also, are there specific books/classes for true beginners? If I have to have 5 books open to look up definitions for the book I'm trying to read I know I'll get frustrated.
Of course, there is much more to invest in besides stocks, like bank CD's, real estate, various bonds, gold, option contracts, and on and on. Aside from CD's, which are pretty simple and can be explained by a bank employee, some of the other options have a steep learning curve.
I also strongly recommend: Money magazine on an ongoing monthly basis, Kiplinger's Personal Finance magazine on an ongoing monthly basis,
and any publication by Suze Orman, who makes everything understandable.
Thanks to you both. I do CDs now but that's as adventurous as I've been. I'll look into the above and see how it goes. I've put away a small amount that I don't count as 'savings' that I planned to try my hand at stocks with. That way if I lose it I'll feel bad but not too bad.
Everyone I talk to keeps saying it's a bad time to buy but I keep thinking if you pick companies that you really believe will make it, why not buy while they're low? I'm probably thinking too simplistically. The hard part for me would be what algorithm to use to determine a good buy.
Then of course I have to learn about how to actually contact someone to buy stock and what's involved in the transaction, what do you do once you own it (just stick a piece of paper in a folder and watch for trends in the price I'm guessing), and then how to actually sell it. Terminology needs to be learned. It's like learning a new language! Sounds kind of overwhelming but fascinating at the same time.
Enthusiastic echo of PTC's reply, quoted. Wish I could give more than +1 rep. Read and reread it and absorb.
If you are interested in stock market investing, the way I see it is this:
--You have already decided you can handle the risk of equities and want to bypass fixed income. Which is fine, just making sure you understand what you've chosen and that you made an informed decision.
--The first stop in equities is not separate issue stocks and their near kin. It is, in my view, index conventional mutual funds or ETFs. Same concept, mainly depends on how you choose to invest. About 75% of equity investors should stop with these and just never go elsewhere. I will say that again. This is where most people should stay. The burden of proof should be on one to prove to oneself one can do better going beyond indexing, and one should hold oneself to a very high standard.
--If you think you are able to beat those with your own smarts at manager-picking, the next stop would be conventional equity funds that have their various focuses and disciplines. Well over half of those don't beat the indices on a consistent basis, so you are betting your guys/gals are smarter than the indices. About 20% of equity investors, in other words 80% of those who want to go beyond index funds, should play it this way.
--If you think you can make smarter calls than professional money managers who spend the majority of their working lives deciding what stocks to buy and sell, then you should be in separate issue stocks, REITs, PTPs, and other stuff that has a share price rather than an NAV.
I see smart investing as a progression starting at the top of this list and moving through it as one gains more market understanding. In my view, about the dumbest thing in the whole world is when people jump into a stock forum with "what stokz should i buy i want 2 triple my $ in 2 yrs plz help!!!!!!!!!!!!". I automatically know from what I'm seeing that that person has absolutely no business anywhere but in index CMFs or ETFs, and the short answer is they're going to learn the way I had to in 1987: by taking a bath investing money they can't afford to lose. Don't want to see you emulate me in that. There is a difference between a gambler and an investor, and a lot of the gamblers would have better odds playing blackjack in Vegas, where at least they have reasonable odds of leaving with most of their money (after a small donation to organized crime).
Put another way, I think you approached this correctly enough that I think it's worth typing all this for the benefit of any others. While in the study and understanding stage, I think it's fine to start with indexing while you learn what the indices are, mean and do, and what's in the indices and how it gets there, and how the next level differs. A gradual movement down the path over the years means that you understand what you're doing every step of the way, and I think that leads to good decisions.
Quote:
Originally Posted by pinetreecity
If you want to get started in stock market investing, I recommend
"The Neatest Little Guide To Stock Market Investing" by Jason Kelly.
This book gives the best introduction to this subject that I've seen.
Of course, there is much more to invest in besides stocks, like bank CD's, real estate, various bonds, gold, option contracts, and on and on. Aside from CD's, which are pretty simple and can be explained by a bank employee, some of the other options have a steep learning curve.
I'm reading through the threads and there's so much contradiction. How does one go about learning about investing - and I'm talking about from level 0? I love to read but how do I know who's reputable and who's not? Also, are there specific books/classes for true beginners? If I have to have 5 books open to look up definitions for the book I'm trying to read I know I'll get frustrated.
Thanks for any advice.
Dea13
Good question, you'll probably get different answers. Personally, I started when I was 19 when I was in debt. I figured, "well someday I'm going to have money, so I might as well figure out what to do with it while I don't have any." So I started out with financial magazines which are (to me) useless when you are new to investing (IMO). Most of it made no sense to me because I didn't have the basic knowledge to distinguish fact from opinion (and there's a lot of bad opinions out there). So, I moved on to terms first, specifically, stock market terms. Then I moved on to the cost of investing - what does it cost to buy and own a stock/mutual fund/etf, etc. (this is important as some investments cost more to own than others); how do I read a ticker, what does 52 week high/low mean, etc.
So basically I started out with the most obvious investment (stock market) then I dissected it. Then I moved on to how to buy it and where to keep it - retirement accounts (401K, Traditional/Roth IRA). If you look at too many things it can be overwhelming because there's so much information. So just take it sections at a time then move on. I personally don't focus too heavily on one specific investment area (like stocks) as it's sexy to own stocks but... it can be brutal. It's a good starting point though.
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