So, ready to kick-start your investment journey with a bang? Let’s go then!
Earlier, I had written about How To Invest As Per Your Age Group. But I realized that it would also be great if I could help a new investor start his Career effectively.
Even if you have invested before, this article will be fruitful for you.
Having discussed Why Should You Invest earlier, it’s time now to tackle the question “How?”
Table of Contents
- Online Courses – Starting Point
- What After Courses? It’s Books!
- Devise a Strategy Before Starting to Invest
- Mistakes Most Amateur Investors Make
1. Online Courses – Starting Point
Why do most people go to college? Besides the degree, isn’t it to learn something new? The college courses will provide you with a rigorous explanation of the subjects.
While you won’t need to go to college to learn about investing, it’s essential that you take up the courses.
You can find plenty of Free investment courses all over the internet nowadays.
I started my journey by taking many courses that have helped me shape my investment path.
Getting step by step guidance from experts will go a long way to assist you in embarking your journey. You will also learn a lot of basic terms that will come handy while investing practically.
“Online learning is not the next big thing, it is now the big thing.”
Donna J. Abernathy, Zalego Academy
There are a few courses that every new investor should take which I would like to mention below:
Value investing is a strategy that involves the investor buying shares that appear underpriced.
For example, you believe that the stock of Microsoft is worth $300 but its market price is $180. You might consider buying it as Value > Market Price.
It was this course that introduced me to value investing, and since then, I am a profound advocate of value investing.
This course provides a practical approach through analyses of the financial statements of a company. (Financial statement is the statement that displays a company’s key activities such as revenue and profits.)
I wished that I had taken this course a lot earlier. I don’t want you to make the same mistake as I did by waiting for a long time.
So this is the perfect time to take this course as most of you are in a Lockdown Amid the Coronavirus Pandemic.
Wouldn’t you want to learn about finance and investments from a Nobel Laureate? What about one of the most reputed professors at Yale University?
Well, this YouTube playlist will lead you exactly there.
The depth of knowledge that Robert Shiller possesses has blown my mind. He has shifted my paradigm by introducing new investment concepts I hadn’t realized existed.
All my high school and my university business classes don’t even come close to this marvelous YouTube playlist.
I wouldn’t want to spoil much about this playlist but would like to encourage you to take this course.
This isn’t exactly a course, but rather an investment blog. Every time I want to learn about a new investment term, I simply go there.
Investopedia provides a simple explanation of even the most difficult investment terms. Moreover, most of the articles consist of videos that will make your learnings more interactive.
2. What After Courses? It’s Books!
It’s time to dive deeper. While you will get a general overview from the courses, it’s the book that will provide you with the detailed insights.
Every successful investor has studied a lot of books before reaching where they are now.
Warren Buffet, the Greatest Investor, claims to spend 80% of his day reading. He believes that to succeed in the investment world, you have to learn whatever there is to stay ahead in the game.
“A reader lives a thousand lives before he dies. The man who never reads lives only one.” – George R.R. Martin, Author of A Game of Thrones
As I have already discussed the 5 Must-Read Books on Investments in one of my earlier articles, I would encourage you to check it out. See for yourself which book you would prefer to read.
- Rich Dad Poor Dad (Best Book for Beginner) by Robert Kiyosaki
- Essays of Warren Buffet by Warren Buffet
- The Richest Man in Babylon by George Samuel Clason
- The Millionaire Next Door by Thomas J. Stanley
- The Intelligent Investor (Best Book on Investments) by Benjamin Graham
P.S. I’m currently reading The Intelligent Investor for the 3rd time. The more I read this book, the more hidden knowledge I am able to extract from it.
So Can I Now Start Investing?
Wait for a While…
3. Devise a Strategy Before Starting to Invest
When you have just started to learn what investing is about, you get an eagerness to buy some stocks, don’t you?
Well, I for one, did! So I bought my first stock. And the consequence? I lost more than 30%!
Sure, I’ve learned a lot from it, but wouldn’t it have been better if I could have avoided it?
There are a lot of questions that you need to answer before making your first investment.
Why are You Considering Investing in the first place?
Obviously, it’s money! But what’s the ultimate purpose? Is it for your retirement? Maybe you want to buy a new home or a brand new car? Perhaps to fund your child’s college fees?
Please Start with Why before going any further.
How long are you planning to invest? Is it for 30 years? 5 years? Or only a few months?
How much risk can you hold? What if you lose all your money? Will you be able to bounce back?
Also, what will you do if the market doesn’t turn out the way you thought it would? Think beforehand to avoid panicking when it actually happens.
Write down answers to these questions so you can see every time when you are going to make a decision related to investments.
Creating an investment strategy helps you from not deviating from your original plan.
“A bad plan is better than none at all.”
Frank Marshall, Former Professional Chess Player
4. Mistakes Most Amateur Investors Make
Besides the Little-Known Psychological Traps, there are a few recurring mistakes that most new investors do while starting out.
I hope you won’t fall for any of these fatal errors.
1. They Buy Without Doing Much Research
A lot of new investors are excited to start buying stocks. So without doing any homework, they tend to buy a stock they think is nice.
The sense of accomplishment of buying your first stock is great, but the regret you will have later could be even greater.
I lost more than 30% on my first investment because I hadn’t researched much about it. Apparently, I was just too excited like most new investors!
You should especially be able to Control Your Emotions.
So don’t be like me! Do extensive research before entering the market.
2. They Don’t Have a Backup Plan
What if it all goes wrong? This is what most new investors don’t think beforehand.
What if the price drops by 50%? Should I hold or sell my stock?
By not having a backup plan, many investors are left shocked when their initial plan doesn’t work.
I urge you to create a followup plan so you can limit your losses when the bad time comes.
“Don’t let anyone crush your dreams. However, the riskier your dream, the better your backup plan must be.”
3. They Buy Whatever is Popular in the Market
As human beings, we have the tendency to buy whatever is popular in the market – after all, we don’t want to miss out on the trend.
While you might be fortunate sometimes, you won’t be able to earn much by following the popular stock.
That’s because, till the time you learn about the “Popular” stock, it would have already been old news. There’s a big risk that the existing trend will stop soon, leaving you puzzled.
Also, please don’t buy just because your friends are buying. What’s the guarantee that they are buying the right stock?
They themselves could have been buying only because their friends have told them to do so.
“Only when the tide goes out do you discover who’s been swimming naked.”
All these mistakes could be costly for those that can’t devote much money to investments. Once they lose, it could be extremely difficult to come back.