Learning how to invest: Where's a good place to start?

[Marlimus]

I have given it great thought, and realized that I have spent exorbitant amounts of my discretionary income on luxury items that actually depreciate in value over the past few years. I speak of colognes, designer clothes, jewellry, and the like. All within my budget, but in retrospect I wonder about the opportinity cost: what returns would I have gotten in I had spent that money on interest-bearing government securities?

None of the business courses I have ever taken have ever taught me how to invest as an individual. I have only been taught how to manage other people's money, and I suspect that this is a flaw in most business schools.

So now I am curious. What reliable books are available on the subject? I have heard about the 'Rich Dad' series, but I suspect that the author derived the bulk of his wealth soley from the sales on his books, and did not speak from his own experience.

I want to learn how to make my money grow. I am not interested in pyramind schemes or other such ripoffs, and I understand that patience is a virtue. I would eventually like to crack the code of the stock market, but for now, I would like to learn the basics; start from a low-risk portfolio and work my way up into the big leagues. What reading material do you recommend?

Marlimus

 

[djbr]

Great question. Waiting for the masters to come to this thread...



I like your "from low to high risk" idea.

 

[lauke]

Yes! This is my specialty.
for the stock market:

investopedia.com and its stock market simulator for learning how to invest. This is a wonderful site.

marke****ch.com for quotes and charts. (holy crap, Market Watch is the name of the website. Frickin "t wat" ...)

wsj.com for the news(requires subscription though).


There are two ways to trade: "technical analysis" (chart patterns) and :fundamental analysis: (company fundamentals). Research on these topics. That's how I started.

A good book is "how to make money in stocks," although the author constantly persuades you to subscribe to his website, investors.com.

Good Luck.

 

[Upper]

Yes! This is my specialty.
for the stock market:

investopedia.com and its stock market simulator for learning how to invest. This is a wonderful site.

marke****ch.com for quotes and charts. (holy crap, Market Watch is the name of the website. Frickin "t wat" ...)

wsj.com for the news(requires subscription though).


There are two ways to trade: "technical analysis" (chart patterns) and :fundamental analysis: (company fundamentals). Research on these topics. That's how I started.

A good book is "how to make money in stocks," although the author constantly persuades you to subscribe to his website, investors.com.

Good Luck.

can you teach me about "fundamental analysis"/news plays? thanks

 

[lauke]

Basically, fundamental analysis is regarding how well a company is faring.

This includes financials (For ex, google's financials), Ratios, how fast a company is growing, how profitable it is, how efficient it is, etc.

Information regarding sales (when, what, and where), future investments of the company, etc are all fundamentals. This info, however, is very hard to obtain.

Most institutional investors use fundamental analysis because they are mid to long term investors and are able to get the information.

Good links:
http://www.investopedia.com/university/fundamentalanalysis/
http://www.investopedia.com/articles/fundamental/03/022603.asp
http://www.investopedia.com/articles/fundamental/03/101503.asp
http://www.investopedia.com/university/financialstatements/

 

[niggitywiggity]

I'll give you a short overview to begin with:

1. lowest risk is a savings acct. You won't make a lot of money (around 4%) though.
2. next, is a money market acct
3. then, bonds
4. mutual funds
5. stocks
6. derivatives

So you wanna learn how to manage and increase your finances? Check out these:

fatwallet.com (go to forum -> finance)
morningstar.com
Morningstar's Five Rules for Investment Success
anything by Peter Lynch

this should give you a nice entry to the world of investment

 

[Marlimus]

Thanks! Keep it coming...

 

[Bible_Belt]

Remember with your fundamental analysis that stock market pricing is about future expectations. Look for revenues that are trending up and debt that is trending down. If a stock says "n/a" for p/e ratio, that means that the company is not net profitable, and is a higher-risk investment.

Here's a question that we would ask people on the first day of a day trading school. Maybe it will start a debate here:

When you read a ticker tape like the one at the bottom of the screen on CNBC, how do you tell the buys from the sells?

 

[Jester FPS]

Pick up The Lazy Person's Guide To Investing and The Motley Fool's Investment guide for teens.