Question by SH: I want to learn about investing in stock market; how do I start from basics?
Please give me link to basic material which will help me read or analyze stock information.
Thank you.
Best answer:
Answer by Joe
Standard investment advice is that you should invest in a diversified mix of stocks, bonds, and money market funds. If you are like most people you will invest part of your money aggressively in stocks, and part conservatively in money market funds and bond funds. However, some young people will go all stocks, and some very conservative people will go all money markets. The links below have on-line questionnaires which will give you an idea of how to do “Asset Allocation,” determining how much to put in each type of investment.
You want to buy a diversified portfolio of stocks as individual stocks are too risky. Highly knowledgeable people can buy a properly balanced portfolio, but most folks have a difficult time balancing things on their own. They will misbalance their portfolio by buying all small stocks or all growth stocks, or some other misbalanced assortment of stocks. Back in 2000, Some people bought all Internet stocks; they got burnt when they all crashed together. You have to diversify across industries. Unless you know what you are doing, it is best to buy mutual funds that will diversify for you. Buy no-load, low cost funds. Mutual funds should have expense ratios of less than 0.5%.
If your company offers a 401K plan at work, try to invest the most you can. The money grows tax free, and some companies will match your contribution. Investing in a mutual fund IRA is also a good idea. If you have children, you may want to consider a 529 plan or other college savings plan that grows tax free.
I like index funds. Because of their broad diversification, you are less likely to have a dramatic drop in value. They also have the lowest expenses. For stock funds, I would suggest putting ~70-80% of your money in the Vanguard Total Stock Market Index Fund. and ~20-30% in a foreign stock index fund. The Vanguard Total Bond Market Index Fund is good for a bond fund. The Vanguard Target Retirement funds can be good all-in-one stock and bond funds for an IRA. However, there are many different opinions out there on what the best mutual funds are. Read the links below and form your own opinion.
If you have high-interest debt, like credit cards, it is best to pay this off first before trying most of the investment ideas above. You should also have 3-6 months of salary saved up as an emergency fund in a bank or money market fund before trying more risky investments.
I will warn you that there is a tremendous amount of stock investing books and websites that teach stock investing strategies that don’t work. Particularly bad are people that teach “technical analysis” systems that sound impressive, but don’t work.
Believing advice you get on Yahoo answers can be risky, so read these websites for further information. If you find it too confusing, contact a professional financial advisor. They will charge you significant commissions, however.
Give your answer to this question below!
What type of investor/trader are you looking to be?
Long term? Medium Term? Swing (a few days to a few weeks) or day trader.
The easiest to learn would be long term investing. The best way is to start with some basic books;
Investing For Dummies
Mutual Funds For Dummies
Then move onto several books in the area of investing that interests you. You’ll never be an expert (as a part time investor) but you can learn enough to be better than the averages and beat the performance of the index’s.
Many web sites will give you some very basic info. It would be like getting a two page brochure on how to drive. Certainly not enough info to start driving. Put in some effort & you’ll be rewarded.
The first thing you have to realize when learning how to start investing in the stock market is that you do not need a full time broker.The next step in learning how to start investing in the stock market is using a budget. never jump in blindly. If you find a stock and have a gut feeling it is going to do good, do not rush into it! you must know that sometimes things just will not go your way. The stock market is a game and sometimes you lose.
Best of luck
ITS a fix game..if you do not have inside information .you lose..and do not get a broker.he only interested in commissions…i say,stay out, if you must invest use the drip program and stay with blue chip stocks..no penny stocks. all are scams…the stock market is a big rig game….only the big boys get real wealthy..the little one s get taken to the market …
Learn about fundamental and / or technical analysis, both work when used properly, although you’re gonna get some losers – no way to avoid it.
Trading in stock market takes nerves made of steel – you’re gonna get lots of people against you, but you will need to stick to your trading strategies regardless of what they say and take losers like a man.
Learning about the stock market from the ground up can be a tedious thing. I spent a year with my 8th grade teacher using our Wednesday lunches about little things here and there, but compounded for the whole year, I came out with a lot of information. This may sound stupid, but I started with a child’s book called “Growing Money: A Complete Investing Guide for Kids”. It covered everything little, everything that would have troubled me while reading an adults finance article coming off the press of CNBC. It covered dividends, stocks, P/E ratios, it spoke about the differences of preferred stock and common stock, it covered the easy stuff.
It was a little embarrassing for me to start my education by reading a child’s book, but if I hadn’t, I’m sure learning would have been much more difficult for me. If you don’t start small, you’ll start on an article and see a word you don’t understand, then you search it and find more words you don’t know, and it will continue. Also, an AMAZING website is “Investopedia.com” I would recommend going to their simulator and they “give” you 100,000 fake dollars to invest. You choose any stocks you like and try to make your money grow. It’s VERY realistic. Also, there are many terms and helpful articles for beginners.