Learning something new as complicated as investing can be overwhelming. It seems like there’s too many things for beginners to learn, and not enough time to learn them all.
You might be thinking: “There’s no way I can catch up or compete with the market experts, they have so much more experience than me.”
That is wrong! Don’t fall into this trap! That is what they want you to think, so that you will buy their services or pay their fees to handle your money.
These type of experts are insecure and aren’t thinking about your best interests. The so called experts who don’t encourage you to educate and empower yourself are only in it for themselves. Stay away from these people.
And that’s the beauty of investing. It is a lifelong journey. So take a deep breath and relax, because this journey will not happen overnight. Instead of letting this fact frustrate you, accept it and enjoy it.
Now, are you ready to start learning?
Beginners: Start Here
Think about a time when you tried to learn something new. Something that seemed so intimidating at first, but it became second nature once you got the hang of it.
Remember when you first learned to ride a bike. Try to picture the fears you had, mostly from the uncertainty in your abilities to ride that bike. What got you over that hurdle in your life? What was the key to learning that skill?
From my own reflections in riding a bike and learning how to invest, I’ve come up with 4 key hurdles to learning something new.
2. Learn the rules
3. Get help
4. Do it
The first step, desire, is actually the most important step. You need enough desire to overcome the fear of something new. Just like learning to ride a bike, you need that desire to push you through when the going gets tough.
You may fall down, you may experience some discomfort, but if you can’t visualize yourself as a winner at the end then you will probably quit halfway through.
Need some more desire? Find stories of other successful investors, and use them to inspire you. A book like Peter Lynch’s Beating the Street tells the story of how a young Peter Lynch used some common sense investing to explode a portfolio.
Or Warren Buffett’s story, a regular guy who became a stock picking genius at the age of 27. He had business ideas since he was 10, started small and is now the most recognized investor today.
Rich Dad Poor Dad by Robert Kiyosaki is a fantastic book about building wealth for yourself. Robert explains that “your most important asset is your mind.” I couldn’t agree more.
2. Learn the Rules
Next you have to learn the rules. Before you ride that bike you have to know how the pedals work and how the brakes work. You have to know where you can ride and where you won’t be able to ride.
It’s the same with the stock market. You have to learn how to buy and sell. You have to learn what a dividend is, how the market operates, and that there are two sides of the story to every stock.
It’s at this point that you have to wade through the chaos. Be careful what you read, and take everything with a grain of salt. Remember that those who aren’t encouraging education are trying to trick you into buying their product.
Get on Google and do some independent research for this step. I’ll provide a couple links to help you get started, but it’s up to you to figure out what you do and don’t understand yet.
That’s why it is so important to have desire first. If you can’t see the possibility of success, and the reason to this work I’m assigning you, then you won’t do it. So really read the books I recommended, then come back to this post.
In fact, I’d recommend spending a week on each part of the learning process: desire, learn the rules, get help, and do it. I promise you that in a month’s time, you will be better equipped to succeed in the market than most investors out there today.
Another great resource for this would be Mad Money on CNBC. Don’t listen to his stock recommendations, as he makes hundreds of suggestions a month. But do listen to the show to understand the lingo and overall functionality of the market.
3. Get Help
Once you learn the rules, it’s important for beginners to seek out the help of someone else more experienced. When you were a kid, I’m sure you had your parents to guide you through riding a bike for the first time. Getting help is almost as important of a step as having desire.
The problem here is that there are too many resources available out there. At this stage of the game, you need something that will direct you with clarity and certainty. For this third step I suggest buying the most influential book I’ve ever read on investing, The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition).
This book was written by the father of value investing Benjamin Graham. It is a book that Warren Buffett said is “by far the best book on investing ever written.” [Tweet This] The $20 I spent on this book was the best investment I’ve ever made in my life, and it has already paid me back multiple times.
I warn against jumping straight into this book though. The terms used require just a little bit of basic understanding, which is why Beating the Street is the perfect book to read beforehand. The book is also over 500 pages, which may be stressful if it’s the first book you read on investing.
A second resource I recommend for getting help is my own eBook, the 7 Steps to Understanding the Stock Market. The book takes your hand and walks you through the education you need in an easy to follow guide. Just as a parent would walk with you while trying to ride a bike, I guide you through a learning process. The eBook is a perfect supplement to the Intelligent Investor, and you will then have everything you need to get started.
If you are a beginner, I’ve been in your shoes and know the problems you are facing. The reason for this post and the reason for my eBook is to give you that push you need to finally feel like you know enough to start investing. Once you’ve completed the first three steps [Desire, Learn the Rules, Get Help], then it’s time to get your hands dirty.
4. Do it
The final week is quite easy, but is very important. A kid could learn everything he needs to ride a bike, but he hasn’t actually learned until he does it. At some point you have to avoid analysis paralysis, and just get your feet wet.
For the first day of the final week, sign up for an online broker account. The process may take a few business days for your account and a deposit to be approved. Next, take some time to research a stock you want to buy. Get familiar with analyzing and comparing stocks.
Then, the final step is to make a stock purchase. I go through how easy the process is in my guide. Don’t worry about getting it right the first time out, and you can even get comfortable by just buying one share and seeing how the experience plays out. I did that when I first started, and it gave me a sense of accomplishment.
My first stock I ever owned was Microsoft MSFT, and while it hasn’t done much it still holds sentimental value. No harm no foul, because my next stock I bought 40 shares of and it’s been a 25% gainer since January for me. But I don’t think I would’ve gotten to that point if I hadn’t first taken each step I’ve outlined above. Let me recap the whole thing for you one more time.
TO DO (Recap)
2. Learn the Rules [1 week]
Google as much as you can about the stock market [Free]
Check out these links: Investing Ideas; How the Stock Market Works Video
Watch Mad Money on CNBC to learn the lingo [Free]
3. Get Help [1 week]
Read The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham [$11.46]
Read 7 Steps to Understanding the Stock Market eBook [Free]
4. Do it [1 week]
Apply for an online broker [Free]
Research and then buy a stock [$4.95]
Total: $34.99. I promise you this will be the best investment you will ever make. Take these resources and they will pay you multiples of $35 for the rest of your life. Take the time, don’t cheat these steps, and you will see clear results. You will no longer have to wonder how to start or what you are missing out on.
Thanks for reading. At no additional cost to you, you can purchase these books mentioned above through my affiliate links, and I get a small percentage of the proceeds. Thank you for supporting my efforts, and I hope I’ve empowered you to become wealthier.
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**Beginners: Where to Start**
**Link for the photos: Photo Attribution**
**All Rights Reserved. Investing for Beginners 2013**