Investing for Beginners

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ack012's picture
ack012
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Investing for Beginners

Hey guys.  Quick question.  I've been reading a lot of information about the economy that past year and I feel that I have a decent grasp on it right now. However, I really don't have much knowledge on investing.  What's a good book or place to start out basically from scratch?

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
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Re: Investing for Beginners

ack -

We need more info to be any help

Where are you in life?  What is your family situation?  Are you employed/retired/semi-retired?  Do you have a current retirement plan/Roth/401K?

What do you want your money to do?  Preparation, debt reduction/elimination, charity, etc?

How much time do you have to devote to trading/investing?

 

There is no single "good book" to start from scratch without knowing where you want to go with it.

Until then here's a couple to chew on:  Most are mind set books.  Trading is 90% discipline and mind-set instead of "smarts"

The Disciplined Trader - Mark Douglas

Trading For A Living:  Psychology, Trading Tactics, Money Management - Dr. Alexander Elder

Getting Started In Options - Michael Thomsett  (I trade options and threw this one in for consideration)

ack012's picture
ack012
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Re: Investing for Beginners

Thanks for the reply.  Well right now I don't actually plan to invest considering I don''t make enough money with my part time job (my savings is only $3000 at the moment)  I just want to start learning about it. I'm 23 years old about to graduate college in December.  My main goals for the short term would be to pay down school loan debt and start learning about retirement planning options/long term investing.  

piquod12's picture
piquod12
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Re: Investing for Beginners

hi ack012

Check out the Motley Fool website. Being based in the UK I use www.fool.co.uk which has an excellent discussion foum for beginners as well as experienced investors. I believe the US site is just as good.

ack012's picture
ack012
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Re: Investing for Beginners

Thanks piquod12. That's funny you mentioned that site because randomly I had found myself reading a thread on there. I'll check it out a little bit more.

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Morpheus
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Re: Investing for Beginners

Fear, Greed & Panic: The Psychology of the Stock Market

http://www.amazon.com/Fear-Greed-26-Panic-Psychology/dp/0471486590

A MUST read. 

Also, watch the technical analysis tutorials on www.informedtrades.com

canpa's picture
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Re: Investing for Beginners

Hi ack012

With a small amount in savings and school debt, your best investment is in yourself by setting up a safety net and then eliminating all your debt as quickly as possible.  A plan that I came across and have been following is in Dave Ramsey's The Complete Money Makeover.  Not for the faint of heart: IMHO his is like the Marine Corps of debt reduction plans.  It is logical and stepwise; I was going to say easy to do, but that depends on how willing you are to to step outside what Mom, Dad and 99.9% of all the financial planners say to do.  Yeah, sure I know he is a born again type, but he does not flaunt that in his books.  if you are of that belief, you may find it additionally comforting; if not, it is easy enough to skip over the occasional biblical reference.  

I'm debt-free for 3 years now and slowly/surely accumulating funds toward purchasing a piece of property with cash, ie no mortgage.  My partner and I still go eat out on occasion, travel to visit family and enjoy some concerts.  We just have a plan/goal and live within our means.  

Ramsey talks about types of investments for the future, but not until debt is paid off.  Think about it: Look at what your debt interest rates are- even if 3-6%, there are few "investments" that I know of for us mere mortals that guarantee that rate of return.  After debt is gone, look at how much monthly you had been paying into your loans: that's all yours now, to do with as you choose.  

My $0.02: stash $1000 cash in a safe place in your home- this is for emergencies ONLY.  Then, drink one less cappuccino (or whatever...) each week and add that amount to your monthly payment of the loan that is closest to being paid off.  When you eliminate that 1st loan, add that monthly amount to the monthly payment for the next easiest loan to pay off and so on until all the loans are gone.  Destroy all credit cards and use debit cards only.  Only buy something if you can afford it.  etc.  

I hope I don't sound too preachifying here.  I have friends/relatives who have more Stuff than I do, but they are in hock up to their ears, complaining loudly all the time about how much debt they have but then buying a ocean cruise vacation and charging it.  I tell them that I have zero debt and their eyes go funny, like I farted in public or something and then they start talking about sports.  We humans do the darndest things sometimes., eh?

I wish you vision and strength, friend.  

 

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isora
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congratulations !

Hi canpa. I also payed off all bank accounts. I killed my retirement plans and got my money back. So I bought a house for my family with cash. We even have renters using another floor of the building.

There is only one credit left. It's for our used car (5 years old). To waste money by re-animating the former car we felt to be an even worse decision then to take a credit. Within 21 month we will be square with the bank. Together with our renters we fund a new, efficient heating system for the whole house.

We only made a 1-week-vacation to a cheap destination. My boys had 1 week more of holidays at the coast, using an older hotel without pool, sanitation comparable with a youth hostel.  That had no effect onto the fun they had playing in the water, getting toasted by the sun a little bit and so on.

They knew the way money is created, the Rothschilds, the FED and the banks. I showed them 1 oz. silver bullion coins. It costs as much as one smaller trip to McDonalds. Now we spare that trips and save the money intending to buy our first bullion coins - maybe even this year. Just to start with something ... little.

Johnny Oxygen's picture
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Re: Investing for Beginners

ack012

Check out CNBC they have really good advice and unbias reporting.

 

Yes. Its a joke Undecided

Please do not watch CNBC

perthtam's picture
perthtam
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Re: Investing for Beginners
canpa wrote:

........Then, drink one less cappuccino (or whatever...) each week and add that amount to your monthly payment of the loan that is closest to being paid off.  When you eliminate that 1st loan, add that monthly amount to the monthly payment for the next easiest loan to pay off and so on until all the loans are gone.  Destroy all credit cards and use debit cards only.  Only buy something if you can afford it.  etc.

Maybe ........ but I would start by adding the amount to the debt with the highest interest rate.  Once it is paid off then snowball the all the payments from this first debt on to the debt with the highest interest rate of the remaining debts.  

Nicholas83's picture
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Re: Investing for Beginners

I am so glad I stumbled onto this. I am never in the Markets and Policies section of the site and I am kicking myself for not exploring it sooner. I posted the following thread under the enrolled member forums http://www.peakprosperity.com/forum/beginner-looking-advice-investing/45230 and didn't get any bites. I'll definitly be checking out the books/sites mentioned here.

Thanks!

ao's picture
ao
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Re: Investing for Beginners

Pick up a copy of "The Wealthy Barber, Everyone's Commonsense Guide to Becoming Financially Independent " for starters  It will cost you 1 cent on Amazon plus shipping.  Be wise, not foolish.  Be frugal but not miserly.  Be hard working but not obsessive.  Work on spending less, earning more, and saving more and visit your local library for free information on investing before spending money on books, newsletters, courses, etc. that promise to make you rich.  Minimizing losses is just as important as making big profits.  But give 10% of what you earn back (to your favorite religious organization, charity, cause, etc.).  

You need to start with the basics.  Strategies like David Ramsey's are good for debt reduction but his investment advice leaves something to be desired.  And you're not ready for most financial market investing or trading.  That will come later.  Asset allocation is worthy of consideration when you have more assets but useless if your allocations are in all U.S. dollar denominated assets.  You'll find there is much advice given but most people giving advice really haven't become truly financially independent.  Most writers for financial magazines, for example, are 20 or 30 somethings who have little or no money.  I come across people daily giving advice who don't have a clue what they're talking about.  Take advice from people who have been there and done it.  Find a successful mentor who can guide you along the learning curve.  And beware of most financial advisors.  Most of them make their money from their clients, not from their investing acumen. 

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PP Mazzini
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Re: Investing for Beginners

You need to refine your question.  Most of the above responses are giving you advice about financial planning, which concerns all of your financial affairs.  Investing is a subset of this.

Investing is about allocating capital to its best possible use (i.e. the use that provides you with the highest return).  Some would argue that the best use of capital is to pay down debt, others to buy a home, and other prefer to buys PMs, commodities, stocks or bonds.  The points is that to become a good investor requires you to learn how to assess value, so that you can compare the opportunity inherent in each of your investment possibilities, and then deploy your capital into the possibility that is expected to earn the highest return.

You need basic books that allow you to assign values to assets.  You'll find tons of material here:  http://pages.stern.nyu.edu/~adamodar/

SingleSpeak's picture
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Re: Investing for Beginners
Johnny Oxygen wrote:

ack012

Check out CNBC they have really good advice and unbias reporting.

 

Yes. Its a joke Undecided

Please do not watch CNBC

ROFL

koyaanisqatsi's picture
koyaanisqatsi
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Posts: 4
Re: Investing for Beginners

Regarding the Motley Fool.  This is a good place to gain information on investing. It's a bad place to gain wisdom.  They will tell you how everything works, alright, but I constantly get the feeling they're trying to hoodwink me into making crazy investments.  For actual advice, you should definitely look elsewhere.

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