If you are looking for a step-by-step guide on learning stock market basics, you have found it!
This is an online ebook that will take you from start to finish on becoming a successful investor. Investing is much more than just finding good stocks to buy. There is much more than that.
But that being said, this is a very simple online guide. You aren’t going to find some secret system or tricks that will make you millions out of thin air.
It is a very common sense, almost simplistic approach to investing. But don’t let that fool you. There is a lot of power in keeping it simple.
Table of Contents
This probably seems like an unusual way to start out a book like this, but it will be one of the most important. It’s a simple idea that gets overlooked. If you don’t have capital, you can’t invest. There are two main ways people can get capital. One is saving and the other is increasing your earning power.
Other than starting a business on the side, you can also advance your career to make money. Investing in your earning power is a better use of your time, energy and money than to try to beat the market. For a vast majority of people, this will yield a much higher return over the long term than putting time and money into the stock market. But you have to do this wisely. Not all avenues for advancing your career will give you a good return. Here is how to plan your career in a way that financially makes sense while allowing you to do work with meaning.
In order to do any kind of effective planning, you have to have a budget. The more you have in monthly savings will compound to give you exponentially bigger returns in the long run.
Again, I know you are super eager to get started in the stock market, but you really need to do the hard work of paying off your debts. There is a very simple financial reason for this. If you are paying 18% interest on credit card debt, you will need to make at least that much in stocks just to break even. If you think that you are going to get rich quick, enough to pay off all of your debts, than this is not the book for you.
Most people don’t want to go it alone. In fact, most people shouldn’t go it alone. Here is a guide to finding a financial advisor that can come along side you and help you in your endeavors. Two brains are better than one.
These are key terms that you will see and hear used long the way. You will probably learn these terms as you go along, but here is a quick list for you to get a handle on some of these basic terms.
Find out why Warren Buffett recommends that you invest in index funds, even though he doesn’t do it himself. Is he being a hypocrite or just giving you some really good advice? In this chapter you will learn that you don’t have to become an expert stock picker in order to invest well. Using index funds is a quick start strategy that can earn you steady returns over time as you learn to think like a pro. Even after you learn all you can about the stock market, you may opt to go no further than just investing in index funds.
Chapter 8 – Mutual Funds
Once you are putting away your monthly savings into index funds, the next step might be to learn about mutual funds. People make picking mutual funds way too complicated. Here are some common sense ways to pick mutual funds.
Chapter 9 – Value Investing
Okay, now for the fun stuff! Here is how you can use the value strategy to find stocks to buy. It is one of the most widely used strategies out there. The most famous of them is Warren Buffett.
Chapter 10 – Growth Stocks
There are a couple of ways to find growth stocks. You can find them by looking at historical growth rates. Or you can find them by predicting future growth rates.
Chapter 11 – Growth Value Investing
This is taking the best of both worlds. We are going to take a principle called GARP investing. It stands for growth at a reasonable price.
Chapter 12 – Basics of Asset Allocation, Diversification and Rebalancing
Now that you know how to pick stocks and mutual funds, now you need to learn how it all comes together. This is where the rubber meets the road and you get to put into place all that you’ve learned so far.
Chapter 13 – 401K’s, IRA’s and Roth IRA’s
These are vehicles that can help shelter them from taxes. If you are saving 20% a year on taxes, not only are you saving on taxes, but you are leveraging the return that you can get over time. These are ways to leverage without getting involved in the risky scheme of using margin.
For more resources, check out the CNN Money Investing section.