How to Learn About Investing in the Stock Market
The stock market plays an important role in the American economy. And if you’re looking for ways to learn more about investing, understanding how the stock market works is arguably the very first place you should begin.
4 Ways to Learn About Investing
People often have this assumption that wealthy people are savvy investors. But have you ever considered that savvy investors become wealthy people? In other words, it’s not always that wealthy people invest because they have money. In many cases, wealthy people earn the majority of their wealth by investing over many years and decades.
Even more noteworthy is the fact that nobody is born knowing how to invest. And very few people learn how to invest when they’re young. This means the vast majority of people who win with the stock market cut their teeth the good old fashioned way: By proactively investing in their own financial education.
Want to demystify the topic of investing and finally learn what it takes to be successful in the stock market? Here are a few tried and true options:
1. Read Books
Sometimes the best way to learn is to pick up a book – yes, the kind you hold in your hands – and read about investing. While you won’t learn everything there is to know by being a passive student, books provide an excellent starting point and foundation. If nothing else, you’ll pick up some of the vocabulary, terminology, and concepts that serve as launching pads for more complex ideas.
The Neatest Little Guide to Stock Market Investing may very well be the best and most practical book on the topic. This highly-regarded book is short, simple, and easy to understand. It will arm you with all of the basics.
2. Join and Follow Online Resources
There are a wealth of online resources you can use to learn about investing and improve your financial IQ. Joining and following these blogs, groups, and forums will help you stay abreast of new developments and trends.
Sophisticated Investor is one really popular platform. It’s an ideal resource for learning more about stock investing and some of the different techniques and strategies retail investors use to generate positive results. The subreddit r/stocks is another excellent option for immersing yourself in a wide variety of opinions. Just make sure you take everything with a grain of salt.
3. Try a Stock Market Simulation
Want to try your hand at stock investing, but don’t have the risk tolerance for putting your own money into the market just yet? Spend a month or two playing around with stock market simulators to get a feel for how the stock market moves. The apps follow the actual market and allow you to invest “fake” money. You can learn a lot without losing the shirt off your back.
One of the top options is Thinkorswim by TD Ameritrade. It has advanced trading tools, customizable features, and lets you track a variety of investments (including commodities like gold, natural gas, and oil). Bear Bull Traders is another good one. (They also have advanced classes and community features that help you learn in tandem with the simulated experience.)
4. Start Small and Study the Results
Once you’re finally ready to invest, you should take it slow. You want to dip your toes into the water, not dive in headfirst.
If you have $1,000 to invest, start with $200 and spread it out across multiple stocks and funds. (This is easy to do with the wealth of retail trading apps on the market.) Track what happens with your money on a daily basis. When a stock dips, try to find out why. When it rises, see what experienced traders are saying. Remember, this is a learning experience!
Stop Trying to Time the Market
There’s never going to be a perfect time to invest. While you can look back at a historical chart and lament over the fact that you should have invested when the market bottomed out, hindsight is always going to be 20/20. Stop trying to time the market and just get started. By learning the ropes today and dollar-cost averaging over a period of many years and decades, you can finally begin tapping into the secret of the wealthy class.