Investing
Beginners Guide To Investing
Where should a novice really start off? First of all, I believe it should be with this realization.
The stock exchange is not the place for 'get rich quick' ambitions. If riches can be acquired in a flash, it's not in the investment field, despite appearances. While you may hear some home run stories, in the end, most averagely financed people hardly ever get rich from stock investments. Even if share value doubles in a year (a highly unlikely event), you will still need to have invested a fortune to gain an extra fortune. If you cannot invest that much to begin with, would a 100 percent return make you wealthy? Right, it's Not so fast. First rule: to be a good investor, It's better to put away any desperation for quick riches.
To be sure, there are ways for an investor can make an obscene amount of profits. But these almost always involve gigantic risks. Options and futures are such avenues. For a beginner investor with limited mileage, you do yourself a huge favor to steer away from such investment vehicles. First, you will knock your brains out to learn them. Next, total bang-up losses can come so swiftly. Worse still, potential losses can be more than the sum invested, if you dabble in futures and are not careful. Markets often move quickly and you cannot turn your attention to other urgent matters. There are better ways to start as an investor than do options or futures, which are more like gambling to me. I may sound traditional here but I believe a prudent investor always look for solid and proven companies to invest. Companies that are quoted in the stock exchange, companies that are trusted to have a predictably brighter future. Such investments are better for beginners to pick, and relatively safer to invest with their money.
Nonetheless, it must be bear strong emphasis that beginners will not find it easy to make money at the stock exchange. If it were easy, who then would be Warren Buffet? Everybody who's an investor would be a billionaire. The path to investing success takes time, serious study, disciplined efforts and most importantly, independent thinking. Only a few has the will and endurance to sustain this journey. I have certainly faltered time and again. But then, tell me who should be spared from setbacks and confidence knockers? So, there's not only no fast road to investment riches, there's no easy road too. That's the second rule to realize, for every beginner out there.
The third rule to realize in this online investing guide for beginner: though you can treat your investments as 'hobby', it can never be a 'fun' thing. The world of investments is ruled by the investment banks and their executives. They handle all the big deals like floating companies, issue bonds, trade stocks, bonds, currencies and commodities. They do make huge amounts of money. They also employ armies of MBAs to give them an edge to win the investment games. It's their business to go all out to make money. They are not playing around. It is serious business.
So, if you want to succeed, you need to buckle up and be businesslike. How do you adopt this non-intuitive approach to investing? A good place to learn is to look up for books by Benjamin Graham. Digest them in earnest. This will take you a while and it's the right place to start your education. You will be learning from Ben Graham, the father of successful businesslike investment methodology.
With all the above rules, it may sound overly difficult for the little guy to make money. But I can tell you it's still possible because I know I do make money as a little guy. What gives us an edge is, big money funds find it quite impossible to invest in smaller companies. So if you are able to spot any of these companies' products doing well in the malls or supermarkets, that should give you a head start over the big-time analysts of investment banks. This is another successful investing approach you can learn through the books by Peter Lynch. He will show you how to pick winners that he called 'tenbaggers'.
Investing in the stock exchange, to do well you need to treat it like running a business. Maybe a part-time online business. Still, it's a no-nonsense business.
As a beginner's guide to investing, I cannot stress enough that it is extremely difficult to make a second income from the stock exchange. It can be done and you will learn the skills, but it will take time. That's not all, you will need to put in serious study, consistent effort, and independent thought, to end up doing really well.
Jim Banks has over 15 years investing experience investing in everything from real estate to commodity futures and is a frequent contributor to http://www.profit-mountain.com |
Jim Banks
Tags: Beginners Guide To Investing, investing, investor, stocks, stock market, bonds, mutual fund, investmentSimilar articles
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