Investing for beginners

RobsForge · Feb 12, 2016

I just turned 20 and I've been saving up my money for a while now. I held off on going to school because work got busy and I didn't want to go to school without any money to my name. Now that I have well over $20,000 In my savings, I think I want to start taking classes to become a financial advisor or something along those lines (it really makes the most sense, it's one of the few careers they actually teach you useful information that can serve you well even if you don't get a job in that area of study.) I really want to learn about buying and selling stocks and don't feel comfortable giving other people my money to gamble with. I would like to control all my money (obviously as much as one person can in the market) and would like to know where to start i.e. Websites, books, and so on. I picked up the newspaper and went to the business/ market guide section and have never been more confused in my life. I am an absolute novice and have no idea what all these negative and positive numbers are referring to or what the major indexes, Dow, NASDAQ, S&P 500 are let alone any of this confusing lingo. I live on Long Island, NY so there is a big local market and this is something that is really interesting to me.

Any advice is greatly appreciated and please remember to enjoy your weekend, gentlemen.

blary54 · Feb 12, 2016

Watch this youtube series of videos. Its kinda dry but its exactly what you need: Its a full class on investing. It helped me a lot.
[video]https://www.youtube.com/playlist?list=PLUkh9m2BorqlDJlnBXUaJaMRNE7UDckn6[/video]

August West · Feb 12, 2016

When I was 20 I would have spent half on cars, women, wine, and song.

The other half I would have wasted.

dpm802 · Feb 12, 2016

20yo and you've saved up $20K? Wow ... that's incredible!

Saving money and investing is a good thing. But don't forget to carve out a small percentage of mad-money to treat yourself to some nice things once in a while. Whether its box seats at your team's home game, a 5-star dinner with your girlfriend, or tickets to a Broadway show. You gotta live it up sometimes. It makes no sense to have a lot of money in the bank if you live like a pauper.

Giving your money to someone else to invest for you is not a bad thing. Just be sure to research their credentials and get a clear idea of what fees and commissions are involved. Make sure they keep you fully informed about what is going on with your account and see if they listen carefully to your input and ideas on how to invest it. And double-check to ensure that they understand your long-term goals.

Having someone else watch your money takes a lot of stress out of the picture. You won't have to be constantly on top of stock prices and commodity markets and interest rates. Let them do the homework for you. You just sit back and enjoy the growth and/or income when you get your periodic statements.

PropWash · Feb 13, 2016

If you're itching to jump into the market, I would recommend placing some money in a passively managed fund that mirrors the S&P 500 index. I'm a huge fan of Vanguard's services, but whoever you're currently banking with probably offers one as well.

An index fund attempts to match instead of beat the market, the idea being that over the long term, most people don't beat the market. It's a fairly safe way to get your money into the market while you get smart on buying individual stocks.

Check out Fool.com for a lot of good info as well.

Doraemon · Feb 13, 2016

Remember that investing is simply using your money in a way that gives you a positive return. I wouldn't recommend that you look at investing in stocks as a viable profession, but being a financial advisor is a different matter. At least when you provide advice, the other people put up the money, and you get a commission, whether the advice pans out our not. Of course, if you don't give good advice, you aren't going to get many customers or commissions.

There are many ways to invest money and get a return. A kid can invest $50 in a lemonade stand, and make a 400% profit without a great deal of effort. A friend of mine invested a few hundred dollars in a used pressure cleaner, and it eventually became a business which employed 10 people and provided him with a 6-figure income. Another friend has a door-to-door carwash business. He has high school kids wash cars on the weekends in people's driveways. His investment was almost nothing; his car washing business employs a few young people, he gets a couple thousand dollars a month, and he works only 6 hours a week, booking car washes on his cell phone. Self-employed and small businesspeople are investors of various scale, and with focus and motivation, you can get a good return with less risk than the stock market.

Remember that all business revolves around the common principle of buying low, and selling high, and that there are nearly limitless ways and opportunities to do so. The difference between those who succeed and those who fail is the ability of the successful to plan carefully, and predict as closely as possible the results and potential consequences of their choices, and also to stay motivated. A successful person doesn't see money as the means to buy toys or show off; he sees money as a tool which can be used to make more money.

"Saving money and investing is a good thing. But don't forget to carve out a small percentage of mad-money to treat yourself to some nice things once in a while. Whether its box seats at your team's home game, a 5-star dinner with your girlfriend, or tickets to a Broadway show. You gotta live it up sometimes. It makes no sense to have a lot of money in the bank if you live like a pauper."

I wouldn't follow the above advice, though it is no doubt well-intended. Do not spend money on any unnecessary thing. A good business person does not waste money on frivolities. Those pretty people you see living in big homes and driving BMW's often have more debt than assets, and many a mechanic or plumber has a much higher net worth than these people. I have a nice apartment in the most prestigious part of Tokyo; the monthly rent is three times the average monthly salary of a typical Japanese salaryman. But as my business is registered at the same address, half of the rent can deducted as an expense. Also, the building and neighborhood are very respectable; these impress my customers and suppliers, and in the end, facilitate my doing business. So, though my apartment is expensive, it pays for itself. I do buy toys for myself, but these are toys which I can sell for at least what I paid for them, and usually more, so I get the pleasure from owning and using them, but they cost me nothing. I like classic cars; I have never sold a car for a loss. I like to play guitar, and I have some very nice guitars, any of which I could sell for more than what I paid for it. Never buy, always invest. If you want to see a Broadway musical, or eat at a Michelin star restaurant, take a customer or client, and claim it as a business expense.

Lastly, a little information about the verb "spend". You can spend only two things, time and money. If you lose or waste money, you can probably find a way to get it back. The same is not true of time. Time must be much more carefully spent than money, because you can never recover wasted or lost time. If you want to earn a good return on your money, you had better learn how to invest your time very carefully.

I hope this doesn't sound difficult or hard, because it isn't, at least once you get going. When I was young, I built a chicken coop for my mother. I made a simple plan, bought the tools and materials, and spent a few days putting it up. At the end of each day I looked at my work, and I was proud of it. It motivated me to start early each day, and do a good job. When it was done, I was quite proud. I had created something useful with some wood, nails, wire, paint, tools, and time. Building the chicken coop gave me pleasure, and seeing it when it was finished gave me even greater pleasure. Owning and growing your own business (or a good investment portfolio) gives you the same pleasure, and better yet, it can provide you with a good life. But the focus should always on the work, and on always making your business grow. The moment you stop growing is the moment you start dying, and this applies to more than mere business. The money is not the necessarily the goal; if you invest well, and are disciplined, the money will come. When it does, put as much as you can back in. The more you put in, the more you will get out, and so on.

It sounds like you are off to a good start, and you have some capital to start with. Be careful with it, you can make it grow. I hate the old saying which goes "it takes money to make money". That is nonsense. If you cannot turn $1 into $10, you will never be able to turn $1 million into $10 million. And no, it is not difficult to turn $1 into $10, as any kid who has run a lemonade stand can tell you; restaurants regularly turn $1 into $10 with many of the meals they serve. I started my own business with a $10 investment. If you could see the view I am looking at from my window as I write, you would never know that the first step toward it was only that first $10. And no, it didn't take that long, I started only 7 years ago. I only wonder how I would have done had I not begun in the middle of a worldwide financial crisis.

Good luck, and don't let anyone or anything hold you down, or keep you back.

BSAGuy · Feb 13, 2016

Congrats on amassing such a stake at your age. Very well done. I am a financial advisor and this is a challenging, but rewarding career. Markets do not go up indefinitely, so a lot of a good advisor's work is about coaching clients and managing their expectations, building a diversified portfolio that reflects their personal risk appetite and keeping them from bailing out when they get nervous.

Some tips.

1. Diversify your funds among different asset classes (or funds) such as stocks, bonds, international, domestic, small cap, large cap, etc. You can use a small slice of commodities, private equity, and real estate funds as shock absorbers in your portfolio.

2. Be patient and have a long time frame. Saving is when you accumulate funds for a specific future purchase, such as a n=home. Investing is when you dedicate sums to a long term in the markets, say 5-10-20 years or more.

3. Markets fluctuate. Don't panic and sell at the bottom. Most investors buy high and sell low which is the exact opposite of what you should do.

4. Don't try to time the market. Put your money in, reallocate from time to time, and be patient.

5. You can't control the markets, but you can control your savings rate. If you can save 15-20% of your gross, you will succeed.

Good luck and enjoy!

Mr Bob · Feb 13, 2016

If your goal is personal management of investments, then you would probably benefit greatly from an introductory class in investing that covers stocks, bonds, annuities, options, futures contracts, risk vs return, portfolio management, pricing theory, present/future value, etc... You will likely find such a class at a local community college, online, or you could self learn using an investment theory textbook.

An understanding of how to read and interpret financial statements and SEC filings will be of great benefit. I do not think that an introductory course in investment will delve too deeply in financial statements, but rather may be part of another finance or accounting course. Financial statements and prospectus' tell you a lot about individual companies or investment products, however, the whole picture can not be put together by just reading the numbers on their own (gross, net, liabilites, and so on). You need to learn their language, that is, how to translate both the numbers and the text of the statements to get the big picture.

If you wish to sell investment products to others, then you will require more training, licensing and certifications, depending on what products you wish to sell and where you intend to work. For example, many financial advisers that work for large firms likely have some insurance license and a series 6 license to sell funds. Adding a series 7 license will allow you to sell individual securities and options. Adding a series 3 opens up futures contracts. You will need formal preparation for these licenses, in particular the series 7 and 3. If this is your goal, then speaking with a counselor at your school and talking to investment brokers and CFP's will help get you on the right path, as the requirements vary depending on how far you want to go (financial adviser or Certified Financial Planner, employee or self-employed). Financial planning services offered by CFP's go beyond the services offered by financial advisers and cover aspects from cradle to grave (tax, estate, assets, college funds, investment goals, etc...). Both serve a function, just depends on what you want to focus on.

doofus · Feb 13, 2016

I've worked for several financial firms. I absorbed the seasoned advisors and other facets of the industry knowledge like a sponge. Currently I trade in a Scottrade account and that's what I do. No 9 to 5 job for me but I do have a sizeable chunk with an advisor because like said above diversity is key.I make good Money. I'd recommend getting a job with a good financial service company that will pay for your licenses if that's the route you want to go. Generally independents won't pay but the big firms do. I was exactly the same mind set as you and loved learning the industry and it is extremely valuable $$ knowledge.

RobsForge · Feb 13, 2016

Doraemon said:
Remember that investing is simply using your money in a way that gives you a positive return. I wouldn't recommend that you look at investing in stocks as a viable profession, but being a financial advisor is a different matter. At least when you provide advice, the other people put up the money, and you get a commission, whether the advice pans out our not. Of course, if you don't give good advice, you aren't going to get many customers or commissions.

There are many ways to invest money and get a return. A kid can invest $50 in a lemonade stand, and make a 400% profit without a great deal of effort. A friend of mine invested a few hundred dollars in a used pressure cleaner, and it eventually became a business which employed 10 people and provided him with a 6-figure income. Another friend has a door-to-door carwash business. He has high school kids wash cars on the weekends in people's driveways. His investment was almost nothing; his car washing business employs a few young people, he gets a couple thousand dollars a month, and he works only 6 hours a week, booking car washes on his cell phone. Self-employed and small businesspeople are investors of various scale, and with focus and motivation, you can get a good return with less risk than the stock market.

Remember that all business revolves around the common principle of buying low, and selling high, and that there are nearly limitless ways and opportunities to do so. The difference between those who succeed and those who fail is the ability of the successful to plan carefully, and predict as closely as possible the results and potential consequences of their choices, and also to stay motivated. A successful person doesn't see money as the means to buy toys or show off; he sees money as a tool which can be used to make more money.

"Saving money and investing is a good thing. But don't forget to carve out a small percentage of mad-money to treat yourself to some nice things once in a while. Whether its box seats at your team's home game, a 5-star dinner with your girlfriend, or tickets to a Broadway show. You gotta live it up sometimes. It makes no sense to have a lot of money in the bank if you live like a pauper."

I wouldn't follow the above advice, though it is no doubt well-intended. Do not spend money on any unnecessary thing. A good business person does not waste money on frivolities. Those pretty people you see living in big homes and driving BMW's often have more debt than assets, and many a mechanic or plumber has a much higher net worth than these people. I have a nice apartment in the most prestigious part of Tokyo; the monthly rent is three times the average monthly salary of a typical Japanese salaryman. But as my business is registered at the same address, half of the rent can deducted as an expense. Also, the building and neighborhood are very respectable; these impress my customers and suppliers, and in the end, facilitate my doing business. So, though my apartment is expensive, it pays for itself. I do buy toys for myself, but these are toys which I can sell for at least what I paid for them, and usually more, so I get the pleasure from owning and using them, but they cost me nothing. I like classic cars; I have never sold a car for a loss. I like to play guitar, and I have some very nice guitars, any of which I could sell for more than what I paid for it. Never buy, always invest. If you want to see a Broadway musical, or eat at a Michelin star restaurant, take a customer or client, and claim it as a business expense.

Lastly, a little information about the verb "spend". You can spend only two things, time and money. If you lose or waste money, you can probably find a way to get it back. The same is not true of time. Time must be much more carefully spent than money, because you can never recover wasted or lost time. If you want to earn a good return on your money, you had better learn how to invest your time very carefully.

I hope this doesn't sound difficult or hard, because it isn't, at least once you get going. When I was young, I built a chicken coop for my mother. I made a simple plan, bought the tools and materials, and spent a few days putting it up. At the end of each day I looked at my work, and I was proud of it. It motivated me to start early each day, and do a good job. When it was done, I was quite proud. I had created something useful with some wood, nails, wire, paint, tools, and time. Building the chicken coop gave me pleasure, and seeing it when it was finished gave me even greater pleasure. Owning and growing your own business (or a good investment portfolio) gives you the same pleasure, and better yet, it can provide you with a good life. But the focus should always on the work, and on always making your business grow. The moment you stop growing is the moment you start dying, and this applies to more than mere business. The money is not the necessarily the goal; if you invest well, and are disciplined, the money will come. When it does, put as much as you can back in. The more you put in, the more you will get out, and so on.

It sounds like you are off to a good start, and you have some capital to start with. Be careful with it, you can make it grow. I hate the old saying which goes "it takes money to make money". That is nonsense. If you cannot turn $1 into $10, you will never be able to turn $1 million into $10 million. And no, it is not difficult to turn $1 into $10, as any kid who has run a lemonade stand can tell you; restaurants regularly turn $1 into $10 with many of the meals they serve. I started my own business with a $10 investment. If you could see the view I am looking at from my window as I write, you would never know that the first step toward it was only that first $10. And no, it didn't take that long, I started only 7 years ago. I only wonder how I would have done had I not begun in the middle of a worldwide financial crisis.

Good luck, and don't let anyone or anything hold you down, or keep you back.

Thank you for taking the time out of your day to respond to this thread in such depth and clarity, it really means a lot to me. Everything you said is really sinking in and motivates me to be the best I can be. I took a screenshot of your post so I can look back on it from time to time if I'm ever falling off track. It's all about investing in yourself, because in reality YOU are the only thing YOU have control over in your life.

Enjoy the the weekend and that view from your apartment buddy. Some day I'll have my own view and will be able to reflect on how far I've come.

RobsForge · Feb 13, 2016

BSAGuy said:
Congrats on amassing such a stake at your age. Very well done. I am a financial advisor and this is a challenging, but rewarding career. Markets do not go up indefinitely, so a lot of a good advisor's work is about coaching clients and managing their expectations, building a diversified portfolio that reflects their personal risk appetite and keeping them from bailing out when they get nervous.

Some tips.

1. Diversify your funds among different asset classes (or funds) such as stocks, bonds, international, domestic, small cap, large cap, etc. You can use a small slice of commodities, private equity, and real estate funds as shock absorbers in your portfolio.

2. Be patient and have a long time frame. Saving is when you accumulate funds for a specific future purchase, such as a n=home. Investing is when you dedicate sums to a long term in the markets, say 5-10-20 years or more.

3. Markets fluctuate. Don't panic and sell at the bottom. Most investors buy high and sell low which is the exact opposite of what you should do.

4. Don't try to time the market. Put your money in, reallocate from time to time, and be patient.

5. You can't control the markets, but you can control your savings rate. If you can save 15-20% of your gross, you will succeed.

Good luck and enjoy!

Thank you for taking time out of your weekend to respond to my thread, I appreciate the kind words and advice. I am glad there are guys like you willing to help!

RobsForge · Feb 13, 2016

PropWash said:
If you're itching to jump into the market, I would recommend placing some money in a passively managed fund that mirrors the S&P 500 index. I'm a huge fan of Vanguard's services, but whoever you're currently banking with probably offers one as well.

An index fund attempts to match instead of beat the market, the idea being that over the long term, most people don't beat the market. It's a fairly safe way to get your money into the market while you get smart on buying individual stocks.

Check out Fool.com for a lot of good info as well.

Thank you for replying to my thread, I really appreciate it. I'm going to do my research

RobsForge · Feb 13, 2016

doofus said:
I've worked for several financial firms. I absorbed the seasoned advisors and other facets of the industry knowledge like a sponge. Currently I trade in a Scottrade account and that's what I do. No 9 to 5 job for me but I do have a sizeable chunk with an advisor because like said above diversity is key.I make good Money. I'd recommend getting a job with a good financial service company that will pay for your licenses if that's the route you want to go. Generally independents won't pay but the big firms do. I was exactly the same mind set as you and loved learning the industry and it is extremely valuable $$ knowledge.

Thanks for reply, I really appreciate it. I'm going to do my research before jumping into anything. Enjoy the rest of the weekend!

RobsForge · Feb 13, 2016

Mr Bob said:
If your goal is personal management of investments, then you would probably benefit greatly from an introductory class in investing that covers stocks, bonds, annuities, options, futures contracts, risk vs return, portfolio management, pricing theory, present/future value, etc... You will likely find such a class at a local community college, online, or you could self learn using an investment theory textbook.

An understanding of how to read and interpret financial statements and SEC filings will be of great benefit. I do not think that an introductory course in investment will delve too deeply in financial statements, but rather may be part of another finance or accounting course. Financial statements and prospectus' tell you a lot about individual companies or investment products, however, the whole picture can not be put together by just reading the numbers on their own (gross, net, liabilites, and so on). You need to learn their language, that is, how to translate both the numbers and the text of the statements to get the big picture.

If you wish to sell investment products to others, then you will require more training, licensing and certifications, depending on what products you wish to sell and where you intend to work. For example, many financial advisers that work for large firms likely have some insurance license and a series 6 license to sell funds. Adding a series 7 license will allow you to sell individual securities and options. Adding a series 3 opens up futures contracts. You will need formal preparation for these licenses, in particular the series 7 and 3. If this is your goal, then speaking with a counselor at your school and talking to investment brokers and CFP's will help get you on the right path, as the requirements vary depending on how far you want to go (financial adviser or Certified Financial Planner, employee or self-employed). Financial planning services offered by CFP's go beyond the services offered by financial advisers and cover aspects from cradle to grave (tax, estate, assets, college funds, investment goals, etc...). Both serve a function, just depends on what you want to focus on.

Great information, thank you for taking the time to respond to to my thread. I will do my research before jumping ahead of myself. I really appreciate the response.

ackvil · Feb 13, 2016

I have been an active investor and trader for many years. IMHO, the best source for information on investing can be found at Investors Business Daily, a daily newspaper. Go to their website, Investors.com, and start reading the topic "How To Invest." IBD courses will ground you in all you need to know. If there is a course offered in your area, go to it. Also, go to the IBD university and review everything there. IBD advocates what it calls a CANSLIM method of investing. Go to that section and sign up for a free training session, which is a good introduction.

Toothpick · Feb 13, 2016

August West said:
When I was 20 I would have spent half on cars, women, wine, and song.

The other half I would have wasted.

I did exactly that at that age. Except it was other peoples money :lol:

(creditors)

My dad bailed me out of debt :blush:

True story.

So yeah.....you don't want investment tips from me

RobsForge · Feb 13, 2016

ackvil said:
I have been an active investor and trader for many years. IMHO, the best source for information on investing can be found at Investors Business Daily, a daily newspaper. Go to their website, Investors.com, and start reading the topic "How To Invest." IBD courses will ground you in all you need to know. If there is a course offered in your area, go to it. Also, go to the IBD university and review everything there. IBD advocates what it calls a CANSLIM method of investing. Go to that section and sign up for a free training session, which is a good introduction.

Awesome information, I'm going to look into it. Thanks for taking the time to respond to my post, I really appreciate it. Enjoy the rest of your weekend.

RobsForge · Feb 13, 2016

Toothpick said:
I did exactly that at that age. Except it was other peoples money (creditors)

My dad bailed me out of debt

True story.

So yeah.....you don't want investment tips from me

Well....I'll never lend you money or take financial advice from you but you're probably a rad dude to hangout with! :thumbup:

Doraemon · Feb 13, 2016

When I was young, I was lucky enough to work for a self-made millionaire. At the time I didn't consider myself that lucky. I thought he was a cheap skinflint who overworked and underpaid me. He was a millionaire, I was a young man with little money, I thought that since he had so much, he could easily have afforded to pay me more. The only thing he was free with was his advice, which was very honest, and usually pointed out my various shortcomings.

At the time, I thought is advice was just criticism, which he gave to make himself sound superior, and myself inferior. But looking back, his advice was much more valuable than I realized. He was a man who rose out of alcoholism and poverty to a large amount of wealth. He didn't abuse his workers, or cheat his customers; he succeeded because he learned from his mistakes, and simply never gave up.

The world is full of people, but most people are inert. They exist from day to day, and do what they can to maintain their existence. The amount of people who run the world is in fact very small. These people are those who have taken risks, worked hard, stayed motivated, and created all the products, workplaces, and jobs what we have today. Their motivation was not very noble, most of them went into business to earn money, and for no other reason. But no one can get rich or be successful without help. And those that help with an individual's success get a share of that success. All of you who work for someone else have helped your company's owner or owners to become wealthy, and these owners have paid you for your help. The amount you get paid depends on the importance of your help, and the expertise you have. If you want to be as wealthy as your employers, there is no one standing in your way, except perhaps for yourself.

Young people often want to know what they can do to make the world a better place. The answer is simple: be as successful as you can possibly be. The more you can do, the more you can contribute to society. If you want to become rich, you do it by providing a product or service which people value enough to pay for. And when you provide that product or service, you often need to buy materials, supplies, and labor to provide them. Your personal success helps other people to be successful as well.

Successful people need not be education or intelligent; what they need most is motivation, followed by the ability to learn and adapt. They need to learn what it is they have to do to succeed, via success or failure, and to be able to adapt to conditions as they change. I know of more than one high school dropout who has ivy-league university graduates working for him. The three basic ingredients for success are greed, motivation, and the ability to take well-considered risks. Steve Jobs said "stay hungry" (be greedy), and "stay foolish" (take risks). There isn't much more you need to know. But knowing and doing are two different things. Those that can, do, and they become successful. Most don't. Most people don't do more than necessary, and the amount of wealth or success they enjoy is relative to their efforts. Be a doer.

StillShaving · Feb 15, 2016

If you are going to invest in stocks; learn accounting - how to read a balance sheet and income statements. And about current and historical borrowing costs. Might also be useful to understand the basics of technical analysis, not that it is necessarily correct but since so many traders follow, it can become self-fulfilling.

Also be aware that most of the major brokers and retirement plan offerings have started to offer "automated portfolio management", meaning software algorithms are helping individuals choose their specific investments based on age, diversification needs, risk tolerance, etc at a very low cost, making it harder for a human financial advisor to complete. Financial advisors play a bigger role for those in/approaching retirement, but not so much for people trying to save and accumulate.

Search

Investing for beginners

RobsForge

blary54

August West

dpm802

PropWash

Doraemon

BSAGuy

Mr Bob

doofus

RobsForge

RobsForge

RobsForge

RobsForge

RobsForge

ackvil

Toothpick

Needs milk and a bidet!

RobsForge

RobsForge

Doraemon

StillShaving

Similar threads