Learn to Invest in Stocks

By Geoffrey Weed

  • Overview

    In order to build appreciable wealth, it's important not only to save money, but to also invest your savings carefully. Unfortunately, for those who are unfamiliar with the stock market, the process of investing money in stocks can seem daunting. The stock market is an important tool for investment, though, and can truly help those who know how to use it properly. Here's how to go about investing in stocks.
    The trading floor of the NYSE
    • Step 1

      Get your hands on a good book that examines stock trading and read it cover to cover. Some good, relatively inexpensive examples of such books include: "Sensible Stock Investing: How to Pick, Value, and Manage Stocks" by David Van Knapp, "The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits)" by John C. Bogle, and "The Neatest Little Guide to Stock Market Investing" by Jason Kelly. Read the book, absorb its insights and make sure that you look up any terms or concepts that you don't fully grasp.
    • Step 2

      Follow the market before investing in it. Many investors just jump into the market by buying shares of stock. Instead, follow the stock market carefully for a few months before you actually invest. Once again, any time you encounter terms or concepts that you don't understand, research them online to continue learning more. Use publications such as the "Wall Street Journal" to keep up with market fluctuations (see Resources below).

    • Step 3

      Practice investing for free using a stock market simulator. There are many different stock market simulation games online that are offered free of charge (see Resources below). Use these simulators to practice investing and to test your strategies and knowledge.
    • Step 4

      Consult a financial expert. Though it'll probably cost you a little money, it might be a good idea to consult an investing professional when you're first starting off investing. Not only will they be able to offer you advice, but they will also usually be willing to explain things to you and walk you through the basic steps (see Resources below).
    • Skill: Moderate
    • Tip: Remember, you'll probably need to save up at least a couple of thousand dollars before you can begin investing in the market on a large enough scale to diversify your investment portfolio.
    • Tip: If you don't have much money to invest, and have a limited understanding on the investment process, you may want to buy shares of a mutual fund instead of stocks. The mutual fund will automatically help you to diversify your holdings and will be managed by experienced financial experts.
    • Warning:
    • Remember, money that is invested in stocks can be lost entirely. Never invest more than you can afford, and be careful about the manner in which you invest your money.

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