If you have never invested in stocks before, it may seem like a task that would be too difficult to learn how to do successfully. How do you know what companies are best? Where do you even find information about stocks? And how do you even go about purchasing a stock? These are all good questions a novice investor should have.
Since you could be a new investor, let us define a few things. The stock of a company is the total shares that make up the ownership of the company. The stock is divided into shares of the company stock or just “shares”. For simplicity, most people call “shares” “stock”, i.e. “I am stock in Apple”.
Buying stock in a company means you are actually becoming a partial owner of the company! Neat, right?
Now that you know what stock and shares are, you should do some research and educate yourself on strategies on how to successfully invest in stocks. Do not throw your money away by firing from the hip, buying and selling shares left and right.
Plan a strategy, be in it for the long haul, and grow your investments wisely. Read on for the top 3 methods of learning how to invest in stocks, and check out this investing guide for supplementary information.
Utilize Motley Fool
Motley Fool is a well-renowned financial and investing advice website. They have been around since the early and have been recommending single stock picks since 2002 through their “Stock Advisor” service.
Motley Fool has over 600k members and the stock recommendations through Stock Advisor have generated returns of nearly 600% since inception. Check out this Motley Fool review to learn everything they have to offer.
Motley Fool has many guides for new and seasoned investors. For those learning how to invest, they have an entire website section devoted to this, called “Investing Basics”.
Investing Basics contains guides on how to invest money and in stocks, what to invest in, and how to invest in ETFs and index funds. Additionally, they provide recommendations for the best accounts for brokerage and retirement accounts. If you are learning how to invest, Investing Basics is where your focus should be.
Motley Fool’s Resources Beyond Investing Basics
Motley Fool also provides detailed guides for other investing areas, including:
- Personal finance – provides information on credit cards, banks, loans, and home buying.
- Retirement – includes lessons on retirement basics, information on social security, and 401(k)/IRA basics.
- Stock market – explains what the different types of stocks are, examples: growth stocks, dividend stocks, small-cap/large-cap, and blue-chip stocks.
- Stock picks – All Motley Fool stock picks are provided through a subscription to Stock Advisor.
It is apparent that the Motley Fool has hundreds of useful resources for all investors, for free. Besides all the free guides and articles on their website, The Motley Fool offers paid services too.
Their flagship paid service is Stock Advisor, which recommends stock picks (that you should buy-and-hold for at least 1-3 years) every Thursday. Again, their recommendations have achieved tremendous growth of almost 600% since 2002. This fact alone should speak to their credibility as a leading investing resource.
Using the free resources available on Motley Fool’s website is a great way to start with learning how to invest in the stock market. The guides are short and easy reads and after exploring their site for a few weeks, you will feel like a stock investing pro. If you want more detailed information, dive into the top stock investing books!
Read the Top Investing Books
Yes, you should do some reading! Stock investing has been around for over 100 years, during that time many successful investors have written how-to books on the best ways to invest in stocks. Learning from the best is the best practice! Here are some of the top investing books around:
- “The Intelligent Investor” by Benjamin Graham. This book focuses on “Value Investing and is written by the renowned mentor of Warren Buffet.
- “One Up on Wall Street” by Peter Lynch & John Rothchild. Lynch explains how-to review companies’ financial statements in easy-to-understand English.
- “The Essays of Warren Buffett: Lessons for Investors and Managers” by Warren Buffett. Buffett’s famous and well-reviewed novel uses plain words to describe his simple investing principles of “buy and hold” great companies with “big moats”.
- “Little Book of Common Sense Investing” by John C Bogle. Authored by the founder of Vanguard Group, this book provides a great how-to guide on index investing.
- “A Random Walk Down Wall Street” by Burton Malkiel. Malkiel’s book explains why no one can outperform the market 100% of the time and is great for beginners.
These five investing novels are amongst the top-rated reads for novice and experienced investors alike. Check out this larger list of investing books for even more options!
Invest a Small Amount of Money with a Robo-Advisor
Investing small amounts of money in the stock market has never been easier with the advent of robo-advisors. Robo-advisors are digital investing platforms where you can get automated (robot) financial services, such as stock investing.
What is great about robo-advisors for those just starting to learn how to invest in stocks, is that many allow you to invest fractional shares in any company trading on the stock market.
This is great because some people learn better by “doing” and with the capability of investing a low amount of capital lowers your risk while you are still learning! Here are some of the top robo-advisors:
- M1 Finance
- Sofi Automated Investing
Check out this in-depth robo-advisor overview to learn more about all the top options and what each has to offer. All robo-advisors have very low to no fees, saving you money by managing your own investments! It is ideal to not have to have high fees in any type of investment!
When you begin your new stock investing journey, you can invest a small amount of cash and watch it grow for a few months. Or you can set up small automatic purchases of your favorite stocks or ETFs. Enjoy your new investments!