Investing 101 for beginners (2024)

Even if you are a beginner, Investing is for you.

Early retirement, financial freedom, being rich.

These are quite awesome concept, but each one of them requires some sort of money. To get to that level, you need to learn a few things about Investing. I will share some tips and tricks, some learned the hard way, that every investing beginner should know. To the seasoned investors, keep reading, it’s often good for us to read those basic tips as a good refresher.

Keep in mind that these tips will not make you a Super Investor from the get go. They are far from ground braking but they are the foundation of the investing knowledge you are building. Remember that a good foundation makes a building stronger and last longer, same thing can be done in investing.

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If you are a investing beginner in the Investment world, you should not be diving head first.
Trust me, it’s not a good idea, I’ve tried it and I got burned for it.
You should definitely start by reading some basic investing books, or take some investment classes.

• Investing: Investing for Beginner by David Morales
• Stock Market Investing for Beginners by Mark Atwood
• Investing Quickstart Guide by Ted D. Snow

These books are available also for Kindle and as Audiobook (Free with Amazon Audible Free subscription).

These books and courses offers nothing fancy, only the basics for any investing beginner such as what is a stock, what is the stock market, how does it work, how to evaluate a stock to see if it is overvalued or undervalued, making sense of any stock tables and the ratios associated with it. These basics are what really matters, they will give you understanding for the building blocks to come.
You should also get some financial apps to help you keep track of the market in general, to get a feel of what it is like to follow the market. You have a financial advisor and he is taking care of all of your investment? You think you don’t need to know anything?
You should think otherwise!
You should still know what is going on on the market and keep track of what he is doing. Not only are you responsible for your money, but also for your own financial health

Let’s get this one straight right now.
A lot of people says that owning stocks is like gambling at a casino.
To all of you, Investing is not Gambling At All.
When you go to the casino, or when you are gambling, the results are, technically, randomly determined and your fortune is purely determined by your luck. On the other side, your investment decisions are based on researched information, facts and some calculated risk. As such, it’s not a game of luck, it’s not gambling! If you are a Casino fan and there some money you want to gamble, I, like a Casino, will gladly accept your donation! Just ask me for my PayPal account 😉

As an invessting beginner, you are new to the investing world, you are starting to learn your basics.
Like any other activities/hobbies/sport you definitely should try toget some advice(that guy is very good at what he does)before diving in.
Loosing a lot of money because you made a newbie mistake that could have been avoided if you had talked to some friend, is something you don’t want to happen.

As a investing beginner, you should be risk averse. As you keep learning and trying out small investment, you will be able to take some extra, calculated, risk.
What you want is to talk to people that are actively investing. Most likely some of your friends and/or family are already investing and could be great allies. There is a good chance that they’ve made some silly mistake of their own and this knowledge is yours to take!
Now would be a good time to get in touch with afinancial advisorand to start looking at forums and blogs. Don’t forget something, everyone has it’s take, everyone thinks they know how to do it. Not all of it is true or right, you need to learn what to take and what to leave. However, it will let you see different thing and it will expand your mind.

“Why not invest your assets in the companies you really like? As Mae West said, ‘Too much of a good thing can be wonderful.'”
— Warren Buffett

If you are not familiar with it, you shouldn’t be investing in it. Why? because it will be harder for you to detect when thing are starting to go wrong or when it’s going up. This piece of advice is good for any type of investment, not only for the stock market!
If you are good in flipping houses, keep doing it! After all, it’s a form of investment and it’s has less risk because you understand it. If you have a good understanding of a certain industry, biotech for example, you are in a better position to understand the up and down of the industry. You will be able to pinpoint when the industry is booming and when it’s in a downturn so you will be able to act on that.

“My wealth has come from a combination of living in America, some lucky genes, and compound interest.“
—Warren Buffett

Compound interest. What does it really means?
Money makes money over time. The money you, wisely, invest now will grow exponentially. If you understand this correctly, the sooner you start your investment, the more it might be worth later. If you start investing, even a small amount, at the age of 18, even if you put only a few tens of thousands of dollars of your money, over the years, there is a good chance you can a multi-millionaire when you retire! You get it? The younger you start investing, the better it will be!

Start investing now! And you could do it with a low risk investment in CIT Bank Money Market account. It uses the money market to get you a very nice return, which is higher then most of the competition!

You want to start investing but you don’t know how nor where to start?
Why not start small with your spare change?
There is a wonderfully nice application that will let you do that.
Acorn rounds up your transaction and use the spare change to invest in an ETF portfolio. These portfolio are based on the amount of risk you are willing to take. As such, you don’t need thousands of dollars and a huge amount of time investment.
In less then 10 minutes you could have your own investment ready.

Join Acorn Now to start your investment journey.

The human heart is described as the center of our emotions. Emotions are one of the worst enemy of an investor, they cloud the mind and make him take decision he might regret.
Investing beginner are at risk of making emotion based decision because they have never gone trough some nerve wracking experiences. You need to make sure that all of your decision are based on solid, factual research. A lot of newbie tend to panic and sell their stocks when they see the price drop, I’ve been in that situation as an investing beginner. Although it might be a good decision, it might be a very bad one, it might be a good time to buy more shares! In that case you should never let your emotion decide for you, always do your homework before making a decision.

You need to set up a goal, both in terms of money and time.
Are you investing to buy a house? For your retirement?
This goal need to be reasonable, you cannot expect to make a few 1000$ per month if you only start investing 1000$. However, if you want to make 200-300$ for the whole year with an investment of 1000$, then it’s more realistic. You will see people claiming they made an insane amount of money in a very short amount of time with their investment, it’s not impossible for seasoned veterans to be able to get lucky. But, as a newbie in the Investing World, you cannot expect the same thing. If you want, let’s say, 1 000 000$ when you retire, you could do some simple maths to give you an idea of the amount of money you need to invest, and the risk you might need to take, to reach that goal.

There are 2 types of investment you can make, a short term one and a long term one.
As an investing beginner, you are investing your money for time growth, it will take quite some time.
Compounding works magic over time, not in a short amount of time. Investing your money for less then 5 years might not be a good idea if you want to make any significant growth. It is true that there are instances where you can have a nice short term growth, but smartly investing money in the long term is the best option.
Being in the long term doesn’t mean that you need to buy some stock and hold them forever, even if there are some stock you might hold for a long time. It only means that you are in the Investing world for the long term. You need to do your due diligence all the time and remove stocks that are not performing well.

If you’ve started your research already, you have probably heard this piece of advice over and over again.
But because it’s one of the basic tenant of smart investing, I will keep repeating it. And it’s also something that I have experienced first hand. Since we cannot know for sure which stocks are going to rise or fall, it make sense to diversify and have different types of investment, hold stock from multiple companies in multiple industries. This is all to reduce the amount of risk in your portfolio. Take me as an example.
In Canada, banks are highly involved in petroleum company. When oil price went down, Canadian banks where hit hard. Since I had other investments and was holding stock from other industries than finance and oil, I wasn’t hurt too badly.

A younger person should take, if he want’s, more risk in is investment strategy.
Why?
There are several reasons for that. The first is that if you ever take a loss because of your risky position, you have more time to recover from it. The closer you get to your retirement, the less risk you want to take, because you don’t have the luxury of waiting it out and recover from your loss.
The other reason is that you have extra time for growth and by taking riskier position, you can make even more money in the long run. You have the luxury to wait and see how things evolve.
However, take note that I am not telling you to go overboard with risk! The risk level is yours too control, but you should have some investments on the edge of your comfort zone.

I don’t know why, but it seems that, as human being, when you are a newbie at something, you always tend to take extra risk that are really unnecessary. My guess is that newbie don’t understand the risk and they don’t understand the consequences of these risk.
In any case, you shouldn’t be taking those kind of risk or like Icarus you will burn yourself and fall. You need to have some sort of self control and no go beyond the real risk you are willing to take.
Yes, risky endeavors have a lot of good potential, but until you know how to manage these risky stocks, you are way better looking at a long term steady return. You don’t have to always beat the market, making the market is still pretty good. Again, you don’t take too much risk, if you really want a high level of risk, try it out with a small portion of your investment, not 100%.

“Be fearful when others are greedy and greedy when others are fearful.”
— Warren Buffett

Sounds simple isn’t it? When your stock are high, sell them, if the price is low, you enter the position or buy more shares. This is the name of the game. If you ever become good at that, you will be in a good position to make a lot of money. Sometimes, getting out of a position is the best thing to do and you will need to make the call to sell that position even if it’s low. Remember, do your due diligence before selling.

Everyone should be learning the basics of investing. Even if you are a stay at home mom, a doctor or an engineer who doesn’t even do it’s own tax! After all, it’s your own money, you are ultimately responsible for your own financial well being and your retirement money.
And as I explained before, investing your money is the best way to make any appreciable money with your money. Some friends and coworker think that a good investment starts with a saving account. A saving account is not an investment! However, having a good saving account will be very useful for short term money or money that you need accessible rapidly like for an emergency fund. Anyone’s can start an investment and everyone should become an investing beginner!

An investment is like a small plant that is growing.
You need to check on it often, you need to take care of it.
Same philosophy applies to any investment! I don’t say that you need to invest money in it every week or everyday. You can also invest time toward your investment. Reading/watching about what is happening in the market every week at a bare minimum, is very good start! What would be the best is that you get a little knowledge and information everyday. Bloomberg TV is a great asset for that or even Bloomberg Business. You might also want to read forums on investing and growth funds.

The reality is that you need to take an active role in managing your investments, even as an investing beginner, you cannot park it somewhere and expect it to see grow like crazy! It needs to be checked on often, you need to take time to do your research, feeling the market and make sure that your investments are ok. You can be sure that the Investing World is changing, and sometimes it can be very quickly, you need to be aware of what is happening if you want to make the best decision.

Investing is for everyone, you just need to learn the basics, do your research and you can start your journey in the Investing World. It’s a frightful place I admit, but if you follow those basics, there is a good chance that you end up with more money then which with you started.

Again, if you want to start investing now,Join Acorn Now to start your investment journey.

Have a safe journey and Keep the Dream Alive

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