Confusion with Investing
Nov 5th, 2007 by Nut
According to this Bankrate poll, people are very confused when it comes to investing.
As well they should—there is a lot of information out there, and a lot of it is terrible. I went through some growing pains to learn what I’ve learned and I think that’s what keeps a lot of people away: it makes you feel dumb when you start trying to learn something.
That’s the first thing you need to get over in order to learn. Yes, it’s going to take time and it won’t be fun sometimes, but when you think of what investing does and can do for your future (and your family’s future), you’d be a fool not to learn about it.
Investing in the market is still the best long-term way to generate wealth.
So I figured I would list some places that helped me learn about stocks and mutual funds and index funds in the hope that others can also get into it.
- About.com: I’ve always been a fan of this site. It’s a great place to learn new things and their Investing 101 site is filled with easy-to-understand information for the beginner. I printed out huge chunks of that site to teach myself the investment lingo and it really paid off.
- Morningstar.com: Once you know some of the terminology, this is a great place to take the next step. Their Investing Classroom is very simple and very clear.
- Make it part of your routine: This may sound strange, but just like anything in life, if you really want to learn something you have to practice it consistently. Think about the things in your life you really know. For most guys, I would say sports is something they know. How did that happen? Think of the consistent amount of time spent on reading about sports, watching sports, and talking about sports that goes on. Of course you’re going to become kind of expert at it. The key is to make learning part of your daily routine. What I did (and still do, it’s a habit that has stuck) is to read Yahoo Finance and MSN Money every day. MSN Money has more advanced articles on it but it’s a good way of wading a little deeper into some subjects.
- Read a lot of books: Get over this quick: if you want to invest you are going to have to learn to read about it, because it’s the only way to learn about companies or funds you want to invest in. I would start with Peter Lynch’s books because they are entertaining and geared towards beginners. Then I would explore a little bit: check out what different authors have to say so you can decide what kind of investor you are. My picks: The Intelligent Investor, A Random Walk Down Wall Street, Stocks for the Long Run, and keep your eyes open for other PF Bloggers that you are fond of—they always have books to recommend.
- Start with a mock portfolio: There are tons of sites out there that can help you keep track of your “fake” portfolio as you learn. I use my Yahoo home page since I have a Yahoo email, but that one is really simple. Pay close attention to your results and only start investing real money once you’re comfortable with the way stocks and funds work.
[...] So if I want to get my ideas across to as many people as I can, I need to be able to break through that wall that keeps most people away from getting interested in finances and [...]