Stock market dummies epub

You will receive a probation temporary ban for disregarding this rule. Questions, ELI5s, etc belong in the weekly sticky. It's refreshed every Monday. Insubstantial threads, thoughtless questions, and poorly conceived posts will be deleted. Violators will receive warning s or temp bans. NO FINANCIAL ADVICE - The Information on this forum is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose.

The Information contained in or provided from or through this forum is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information on this forum and provided from or through this forum is general in nature and is not specific to anyone. You understand that you are using any and all information available on or through this forum AT YOUR OWN RISK. RISK STATEMENT - The trading of stocks, futures, commodities, index futures or any other securities has potential rewards, and it also has potential risks involved.

Trading may not be suitable for all users of this website.

Anyone wishing to invest should seek his or her own independent financial or professional advice. Users are now free to add flair. Hi, I'm a teenager looking to get into stocks to make some money and I'm unsure if I should invest in typical blue chips or go with penny stocks? Any tips from anyone? Unfortunately for smart blokes like you or me, you cannot simply jump into stocks and make money. That is called day trading, and for most people, you're going to have about the same outcome as betting blindfolded in a casino.

I sound like a pretty pessimistic ass, don't I? Well, I started an individual account for buying stocks back when I was a teenager.

Stock Investing For Dummies Cheat Sheet - dummies

I still have it now, half a decade later. And if you are that lucky, you'd still be better off buying lotto tickets. Now, I've mentioned mutual funds and Vanguard a couple times. Before you get into the market, educate yourself!

And it's not a big leap for me to assume that you aren't, by the way - no stock pro ever trades penny stocks. Here are some recommendations:. If you only read one from that list, by the way, make it "A Random Walk Down Wall Street. TL;DR - Don't go into stock investing chasing ridiculous gains. Consider setting up a retirement account. Put money into indexed mutual funds, not single stocks. If you buy single stocks, consider that money written off.

And, for the love of god, NO PENNY STOCKS. This is amazingly helpful. I thank you so much for all of this. First thing tommorow, I'm sitting down to go over everything you have listed.

Aaaand, rather than going out and buying those books, I can all but guarantee that they're available at your local library. If you can't find them on your own, ask for a librarian's help.

Aaaand I'm sure one of these sites has the ebook you can download for free. Google them for info.

Here's a custom search engine for ebooks: Two spaces after a line will do that too, see? If you just hit enter once you end up with a line like this. My number 1 frugal tip. Use your local library for everything! It saves me hundreds of dollars a year. Also if they don't have a book, ask. They usually have a budget to buy requested books and it's the reason my library has 20 copies of each game of thrones book which surprisingly are still all checked out. They can often accommodate. Don't forget you can ask for an Inter-Library Loan if they don't have something in their collection.

I found 3 of them as torrents but that was only a 2 second search, they are probably all there if you really want them. You've been given some excellent advice. If however you learn something about trading and still want to try it, there are some pro times that will save you a bundle.

I suggest staying away from the brokers that advertise on TV. Their commissions are very high and they don't give you direct access to the market. This will lose you tons of money in something called "slippage" you'll know what that means after you read those books. There are brokers that give you direct access to the market, resulting in faster trades, less slippage, and lower commissions.

This makes a HUGE difference if you are an active trader I'm not affiliated with IB, just a satisfied customer. There are other direct brokers as well.

Starting Stock : finance

Anyway, here are a few general investing tips that I passed on to my kids and that have worked well for me would have worked better but I started too late. They will produce a return that should stay well ahead of inflation, while exposing your investment money to minimal risk.

There are certainly ways to get rich faster, but they all involve significantly higher risk and require a larger amount of disposable cash. The beauty of my "system" don't know what else to call it is that it's adaptable to almost any amount--it can be scaled up or down.

The first thing is to look at all your debt and divide it into 2 piles: For the rest of your debt, pay off the higher interest debt first. This is usually credit card debt, and you need to pay this off before you even think about investing. Think of it this way: Also think of it this way: After your high-interest debts are paid, the next step is to figure out how much cash you have to invest—both cash on hand, and amount per month in the future. You can use less or more, down to a certain point.

More money per month is better, for a number of reasons. First is the lower transaction loss. Second is compound interest. Compound interest is the most powerful force in finance. It is the force behind almost every rich person's fortune. The numbers get enormous over time, because you're earning interest on your accumulated interest.

This is vital to understand: You have a tremendous edge over most investors: And right now because bond and CD interest rates are so low, the stock market is the best place to earn compound interest. Companies are paying out record-high dividends because they are awash in low-interest government cash.

Your daily latte or whatever is costing you way more than its menu price, and that new video card way more than its sale price. Figure out what you can cut out of your spending. Decide on the maximum amount you can invest, knowing that it will be exponentially increased when you are older.

And I'm pissed at my year-old self for buying junk instead of passing it forward to year-old me. Think hard about the effects of compound interest; get the concept in your gut—and apply that thought to your spending habits. It means you will decide on a small group of stocks or mutual fund shares, and buy the same dollar amount of each stock every month, regardless of the share prices. DCA greatly reduces your long-term risk.

It's because more shares get purchased when prices are low, and fewer shares when prices are high. Eventually, the average cost per share will become smaller and smaller. This lessens the risk of investing a large amount in a single purchase at the wrong time. But now the 4th month: Use dollar cost averaging when you invest. Now we talk about what to invest in. DCA can get you in trouble if you buy stock in a risky company that might go out of business.

So the idea is to use DCA to buy stocks in companies that are capital efficient lots of cash on hand, fat profit margins , that are profitable in good times and bad, that have a long track record of growth and success, that dominate their industry, that pay a good dividend, and that have a long record of increasing their dividends over time.

Stocks that are as risk-free as we can envision. I'm at a high interest credit union that is paying. That is why savings accounts and CD's are not any form of investment. They are just a place to park your money, but it would be crazy to store large amounts in them--you lose value every year. I think investing is the only way. Don't get me started--I think the Fed's low interest rate policies are a very intentional effort to induce people to take their money out of savings and put it into the market.

It's absolutely crazy that a retired couple, for example, has to choose between losing money in savings or putting their money at serious risk. I know LOTS of people whose retirements got halved in , just as they were nearing retirement. Many of them had to keep working past their planned retirement age which doesn't help the job market btw ; plus they panicked and bailed out of the market at the bottom in and put their money in bonds for safety.

The market has since more than doubled, juiced by all that cash sloshing around in bonds. It's infuriating--it's rigged to strip money away from the middle and funnel it to the top. Like I said, don't get me started. We are stuck between a rock safe, money-losing savings accounts and a hard place high-risk investments.

And it was all planned. TIPS bonds, if you have a low risk appetite. This is one area where mutual funds are NOT the way to go. A diversified portfolio of TIPS of varying maturities and yields creates volatility that may cost you some of your inflation protection.

There's also going to be expenses, which will almost certainly bring your yield into the negative, especially in today's environment. One downside is that your inflation protection is given via capital adjustments, that is, adjustments to the par of the bond. This is taxed as a capital gain, which must be paid each year, even though you will not realize the capital gain until the maturity of the bond -- it's best to hold TIPS in a tax advantaged account.

You will only be protected from inflation if you hold the security to maturity. I haven't seen any estimates that high in years. People can't just decide to eat only half as much, so we can be fairly sure each household is buying about as much food now as in the 80s. That leaves just a few options:. The first option is not true; food prices have increased slightly faster than inflation.

The second option is possible, but highly unlikely; it would be a nation-wide seismic shift in food consumption, and I've never heard the barest suggestion it's happened.

Thus, the third option, that Shadowstats is wrong, is the only one remaining. Also, MIT's Billion Price Project uses an entirely different methodology to estimate inflation, but results in very similar numbers to the government inflation figures. Moreover, the utility of money may have decreased faster.

You're right though--I was using 10x to emphasize a point about opportunity cost and holding time, rather than as an accurate calculation. That's a whole lot of "ifs. IB advertises a ton on TV. Even "direct to market", the HFTs will eat some of your margins. They also did 1M Euros at 1. Some of the IB ads are kinda amusing: That paragraph really spoke to me and I'm interested in sponging off your knowledge.

How does a young professional with some minor spending money and a decent positive cash flow with no debts be most 'efficient'? It's a vague question intended that way for your personal interpretation. I can't do much better regarding long-term investing than the two long posts I made in this thread. But if you have positive cash flow and no debts you are miles ahead of most people.

Because you're in that position as opposed to the year-old who I originally responded to , you can probably tolerate more risk. You might consider putting, say, half of your investment money toward a conservative growth plan like the one I outlined, and use the rest for something more proactive.

For example, passive income is a wonderful thing. You didn't say what your profession is, but for most people to make more money, they have to work more hours. Something that earns income passively like rental property for example is a good way to break that pattern. After the housing crash there are now millions of people who had to leave their homes and are renting, so the market is good. You can buy an inexpensive house, fix it up, and rent it to a family look into Section 8 as well--the government does a lot of the landlord stuff, takes care of collections, etc.

Another option is to invest in productive farmland. There are lots of passive income opportunities; they just take some up-front cash. They can make you very comfortable once the initial investment is paid off, and they provide lots of tax deductions in the meantime.

I'm also concerned about the overall state of the economy, and I think there are going to be some rough waters ahead in the next few years. I've bought some silver bars just as a hedge against any craziness: But if the economy remains relatively stable, the dollar cost averaging I outlined in my other posts is my best advice. I things really do go that bad that fiat currency is worthless, won't it also be so bad that people will want more important things like food, medicine, clothing and skills to produce these essentials?

Well, there's crazy and there's CRAZY. If it's Mad Max time, you're right. Here's how I look at it: I think the current level of debt will soon lead to a severe dollar devaluation. That's what I'm hedging against, not Armageddon. The other nice thing about this strategy is that, as precious metals are perceived as a safe haven, having them before the shit hits the fan puts you in a great position.

When stocks plummet, that's because people are selling and pulling their cash out of the market. What are they going to do with it? Put it somewhere safe--by buying your metals. The demand pushes the prices sky-high.

It's also artificially inflated right now because of the large group of people led to believe by the gold-brokering company-connected segments of the media they consume that 1 gold will carry them through a mad max situation, and 2 that situation is NIGH. USA's total debt is projected to fall for the first time in a long time in due to sequestration going through, and QE has stopped.

It's not the feds I'm worried about. China is set for their own debt meltdown, though they grew through the recession via a continuous stimulus program giving loans to cities and provinces that makes the US intervention look like pennies, but almost all the money was used to build underused, unused, or unusable infrastructure or simply lost to corruption--and now it's coming due , and US state and municipal debt especially due to pension liability is getting to a crisis point too.

I'm not a macroeconomist, I have no idea what effect that would have on any particular investments, but I've consumed enough media to have that immediate-but-vague sense of fear that sells papers and clicks. DCA does not, on average, render higher returns: This is a great complement to the other reply. I hope more people see this and upvote. Glad to help out! I know, I wrote a massive novel. And there's probably still gaps in it. But feel free to reply or PM with any other questions and I'll do my best to provide answers!

The stocks I like also have a long history of increasing their dividend over time. So your portfolio will be growing in 3 ways that all reinforce each other: All this will result in a portfolio that grows slowly at first, but over time the growth curve will get steeper and steeper.

And you have TIME. There are of course others. I hope that gets you started—feel free PM if you need anything explained better. This example also includes NO increase in the price of the stock—most of these stocks have doubled or tripled in the past 10 years.

You can see how quickly things can grow using compound interest, steady contributions, reinvestment, and sufficient time. TL; DR The rules: Timothy, I don't reply very often, but just wanted to tell you that you are a pro. I'm going to get started researching in investing and stuff. Something that really helped me was googling and reading every Warren Buffet quote I could find.

He's a smart man, and a financial titan. Some examples there are a lot more, I encourage you to read some if you have the time and kind of chew on them mentally:. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball.

They know that overstaying the festivities—that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future—will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight.

There's a problem, though: They are dancing in a room in which the clocks have no hands. The "slow-and-steady" approach will net massive gains over your life if you stick with it, while the "flip the market" approach can make or break you very quickly, but usually just break you.

The last thing I'll add, and not everyone agrees with this but it's something that's made me enjoy money a lot more, is to set aside a certain percentage to give away.

Routinely giving money away has this freeing effect on you where you suddenly aren't obsessed with it or bound by it. I set mine aside in a fund called "blessing other people" and I just give where I see needs, and always try to do it secretly. If you don't already, give it a shot sometime. I disagree with the advice. Get it out of your system. Learn what NOT to do. Learn about your own greed and arrogance before you learn about wall street. If, today, you loose your money in day trading it's because you are asking for it.

They are free platforms that let you train with fake money, do that for few months and see what you'll end up with. If you really really are confident you can turn in some benefit, you have all the option to see if your plans will work. The takeaway is that any type of investing requires time. The get rich schemes are just marketing ploys to separate you from your money; and finally, anyone with the secret to making massive profit in the market is unlikely to be sharing it.

In my experience Traders only want to tell you about their big wins. Look into investing based on fundamentals. It's less exciting but also less stressful. It's the internet and I'm not going to "prove it" but I made Trading is casino stuff and you can really come unstuck.

Also look into the psychology of investing. Share investing requires a mind set rather than a lot of smarts. Can you buy when everyone else are fleeing a stock because you know the intrinsic value is there? Can you resist the urge to jump in when a stock has had an amazing run up? Read Thinking Fast and Slow by Daniel Kahneman to get an idea of the inherent biases in your mind that you can do nothing about except to know they exist and try to counter them.

They weigh heavily on this kind of decision making which is something humans have not evolved to do well. I'd take a year and invest imaginary money and see how it goes. Actually enter your amounts into a spreadsheet rather than sit around with a vague sense of "i would have bought that.

If you made the buy or sell decision it's happened. Alter your spreadsheet and live with it. After a year see how you would have done. Good luck will give you the gravy but if you develop the correct mindset for investing luck is irrelevant. It was exciting and fun, and it got me through a boring day. Twelve months later I received my tax forms from Datek sp? What a waste of time and energy. This is going to get buried, but hopefully you read it. You can trade that money around and not have to worry about capital gains taxes and losses.

Saves you a little headache not having to deal with year-end paperwork. If you can't consider it down the drain then don't trade.

All of that information is very good and accurate except for a few things. Index funds will be less volatile overall. If you're just looking to practice trading, there are a few sites you can use something like: I neither support or endorse anything below YMMMV Generally a good way to see how bad you would do with real money There are things called ETFs which are good for beginning investors.

In particular a lot of brokers offer commission free ETFs, which is an amazing service for small investors like yourself, of any experience level. There is an ETF for literally anything you want; they make portfolios for you and then sell shares of those portfolios. Nothing I am about to say is an endorsement of any particular asset allocation or purchase You can buy ETFs that:.

I recommend ETFs to beginning investors. Trust me from my experience of once being a 19 year old with disposable income who didn't think there was a way in hell his self assumed brilliance could fail him, you're gonna lose money if you start day trading.

Just to add to that, I traded individual stocks in the past while having no experience. I lost over a short period of time, but the worst part was how much time and effort I was putting into it. Instead of buying and holding, I would buy then continually check performance so impatiently.

Not everyone is like this, but it happens a lot I think. Now I just invest in my no sales fee mutual funds through a retirement account. My performance is always slightly under market, but that's ok. I let the professionals handle my allocation automatically so that I spend exactly 0 time worrying about it. I've bought and sold about 6 times. So, your mileage may vary. And if you really want to hone your technical analysis ability: John Murphy, Jack Swagger, Steve Nison are good starts.

John Murphy is a big overview of it all, Steve Nison is straight up candle sticks and how they work. You need lots of money and be very good at technicaly analysis. If you get more interested in it, Alan Farley is a tough read with a ton of info.

Finally all of those authors will mention other authors that are good in their books. This is all for technical analysis. All the books claim there is no holy grail, but there is. I think Peter Lynch made that abundantly clear. There are mistakes to be made, but the average person has more investing power than they think.

Day trading is not implied by the question, no. Day trading isn't nearly as much of a phenomenon now as it used to be, mostly because big players are trading at nearly nanosecond resolution to squeeze any potential short-term value out of the market. I say let them. In a casino, the odds are rigged against you, but only enough so that you hold out hope. The stock market consistently makes money for smaller investors, but there are a lot of sucker's games you have to avoid. That's only about 0.

The market hasn't moved, and you're already at a loss! That's not so bad.

You have to be prepared to lose money on paper or in reality if you're going to invest. Retirement - if you made this money at a job, you can report it as earnings and open up a Roth IRA. I think people are too heavily into IRAs and ks, but I agree that they're a good and necessary component.

Maybe you want this money back in under 45 years. In that case, open a brokerage account. Again, Vanguard is great because you can trade all of their mutual funds for free - no commission! See the bullet point above. If you're interested in individual stocks, well, see the point above with penny stocks. Individual stocks aren't quite like flushing your money down the drain, but they are much riskier than mutual funds, and in most cases you're wagering a limited upside against a massive potential downside.

Okay, so this is where I get into my own personal advice, and I understand that this is only me and my success is not indicative of anyone else's potential for success. I disagree, and I disagree because I've been making money in the stock market since I first started investing in individual stocks.

I've been burned, sure I held MCI when they went into bankruptcy , but my overall returns are nothing to sneeze at. Here's my golden rules:. Okay, so here's what I actually do. Most of it is investing , and the reading list you gave might confirm much of it. That risk must be offset by something or you're going to end up unhappy.

That something needs to be your own personal experience. What do you do for a living if anything, since the GP was young? What do you do for fun?

For example, do you know a lot about cars? What sorts of companies do you know about that make cars? If you're aware of an upcoming shift in how a market does business, think it through and consider who stands to grow substantially as a result. Is it the big players or is it the up-and-comer? The reading list you provided is a good place to go to learn to evaluate companies, but remember that you're trying to identify how what you know is important.

Early in my career, I worked for a financial firm doing systems administration. We spent money like water on routers from Cisco. I knew, from talking to the Cisco rep that he was busy selling similar numbers to other financial firms.

I also knew the power of the early Internet, and knew that financial firms were only early adopters on a growth curve that would be stunning. I didn't invest like some of my co-workers did because individual stocks scared me. I'm not a professional.

You might lose your money if you do the same. Consider what I'm accomplishing in terms of diversification over time more than the specifics. Once I began to invest in what I knew, I needed a way to manage and reduce my risk over the long term. Diversification is an easy way to do that, so here's my diversification strategy:. Your goal, in this stage is to increase the number of lots "L" as much as you can, while keeping trading fees from eating you alive.

Choose carefully, but don't be afraid to go with your gut, backed up by research. I started, early on, by investing in companies that were involved in open source software and the Internet, because I knew the potential of both. I held 3 companies at first. Over the years, companies like Red Hat, Google, Amazon, Apple and others have made me a very reasonable sum of money because I knew what they had to offer. Today, I hold about 10 stocks, all in my IRA, and I'm about to expand to pick up a new one.

That being said, the majority of my retirement money is not invested in individual stocks, but broad market index funds. If those stocks grow to eventually be the bulk of my investment, that's great, but I didn't start there. My k money went directly into index funds and from there I siphoned some off into individual stocks to get me started. To keep this short: Penny stocks are a horrible game of Russian Roulette. You may get an empty chamber and get to keep going a few times, but eventually you're going to get a kill shot.

I figured I had figured out glass ceilings and glass floors, but it's all a farce. Penny stocks have very little reasoning and excessively more risk. Emotion, especially when you start, is a monster that will prevent you from doing the right thing. When I started, I would stay in a stock for maybe a day or so thinking I was "investing" and then I would jump out because I was nervous at losing or gaining a couple percent.

It takes a while to get comfortable and patient. But my mentor taught me that no matter how amazing it feels to make any amazing investment and gain, there is no stronger, devastating feeling than losing big. Don't let emotion rule your actions, but always make sure you have a reason for buying or selling.

It's absolutely possible that you lose all your money in investments. So why are mutual funds safer? Mutual funds are a portfolio of numerous investments.

For the record, I started in the stock market around age , right after the huge stock market crashes of to see if I could get in low and sell high.

Thanks to my investments, living at home for a few years, and barely spending any money on needless expenses I was able to buy my first place when I was And pay off my 30 year mortgage at age 29 last year. If you discipline yourself, you can change your life. Extraordinary Popular Delusions and the Madness of Crowds. My dad wouldn't teach me technical or fundamental analysis until I read that book and beat him in chess. Just as an extra to add. There is no need to pay commissions for Australians at least, I assume other countries are the same.

Every little while, the Commonwealth bank gives you free trading for 1 trade. Just know what you want and do it in a single trade.

And keep in mind that the fee is doubled - once for buying the shares, once for selling them. On the other hand, many companies let you buy their own mutual funds commission-free. And I believe Schwab and Fidelity have some free-to-trade funds as well. Many brokers in the US will let you trade free for a while, like 50 trades or for a month.

And buying and holding one or two stocks is entirely different than day trading, which you did not define correctly to the OP. The potential gains from a fund are a joke. Buy 1 good blue chip or developing technology company on the NASDAQ, and hold for many years, or forever. And don't write it off - care about it, follow it, and learn more.

You have some good advice, but it's far too conservative for a teen investor who should be embracing at least a moderate amount of risk at his age. I'm upvoting this - this is true, a law passed by the SEC to prevent people from losing their shirts due to overextended positions in trading. I learned this a while back when I first opened my account with Schwab.

I was day trading and the broker told me about this law when I called to ask what was up. It's a lot of money, but with that money you can diversify and effectively reduce your risk.

Just want to point out, at such a young age, it's better to learn from your mistakes than to follow such stringent advice. When I was that age, I started messing around with penny stocks, and lost a lot. Nor did I diversify. The lessons I learned from that hit me harder and will stick with me forever. On the other hand, I have friends that aren't so financially savvy but they've always followed these rules for the most part , but they're tempted every once in a while and it never ends well.

Point being, the money that you lose at that age is well worth the lessons you learn. That being said, your advice is still really well put. Single stocks can be OK, but you certainly need to own more than one of them at a time.

Even a half dozen blue chip, industry diverse stocks are pretty secure. You won't see big gains, but you probably won't be kissing that money goodbye either. You are way to harsh on stocks by not mentioning they are excellent medium-long term investments years.

Our economy is cyclical. Bubbles will come and go like the tides and any idiot can see it by following the news. This will probably present you a few dozen points over a working lifetime and as you get more wise with the ways of the world the opportunities will be obvious. I was on my first job read: I was emailed family and friends begging them to invest. One friend bought Citi. He tripled up in a matter of weeks. I he bought BAC he could have quintupled by holding on to it for a bit longer.

Furthermore, as one of the biggest banks int he world BAC was and is clearly undervalued. It's assets were worth more than its value. You are totally right, and I don't mean to bash stocks as an investment - honestly, they are some of the very best things to hold for medium to long term. You are spot on. The issue in my eyes is that many people buy on hype, rather than on valuation. That is not smart investing. You are talking about value investing, which is a well-known and accepted strategy that's how Warren Buffett makes his decisions.

And over the medium to long-term, it outshines any bank's interest rate. My reply was intended more as a cautionary word against jumping in and thinking that day trading will lead to multiple thousands of dollars each day in profit. But thank you for emphasizing the use of stocks as an investment vehicle as well! I mean I didn't lose it all but I learned so much about the stock market and how it works and I'm still holding onto those stocks because they might go somewhere in the future, I'm not in need of that right now.

But as an investment strategy? Just tossing money at the stock market is not recommended long-term. Mutual funds, value investing, buy-and-hold, all of these are fairly basic strategies that I wouldn't have learned if I didn't educate myself on them. I still buy single stocks every now and then, but I also consider those to be "hobby" purchases, more for me to track and watch than for the goal of making tons of money.

I guess I'm incredibly lucky. It's easy to make money when the market is bullish. Last year's overall returns were very good, this won't always be the case. It gives many real-world anecdotes to help you identify when you're being illogical about money. I thought I was pretty smart until I read this book and saw how often I fell prey to the rationalization trap. Come here to say that I will make you rich by Ramit Sethi is essential reading for a guy who wants to make the money work for you.

It's a fantastic book. I was 21 and had just read a shit ton of books on investing as well as taken some very good classes on the subject. Sometimes its good to chase the dream a little and get the much needed reality check. But it's going to keep me from making stupid investing decisions in the future. Some years ago, my dad handed me his copy of the richest man in Babylon.

Looking back, I'm glad he did. I started an individual account for buying stocks back when I was a teenager. May i ask how old you are? If you started as teenager, you still might be a teenager.

Nethertheless you only have 5 years of experience. While all of this is great advice, I don't agree with the penny stock or day trading fear-mongering completely. It's a suckers game if you go in blindly based on somebody else's hyping pumps and dumps or just taking a wild pick, but there's a rhyme and reason in the charts if you take your time to learn them.

In my time in the market, I've only ever had 1 red account whilst I had multiple green accounts. I would suggest instead that he set's up a virtual account and learn Technical Chart Analysis and read a few TA and Pennystocking books.

It really is just a skill you need to master. I learned none of this in high school. It wasn't until I went out and forced myself to read everything I could find on the topic that I learned most of this. I honestly wish that high schools would teach things like this - I think it would have a huge impact on our middle class a few years down the road.

The money won't be available for, like, 45 years. You can do a Roth IRA conversion ladder and access your Roth IRA money five years after you decide you want it. Start by putting your money into a traditional IRA.

Then, once you have enough in your traditional IRA, convert one year of living expenses from your traditional IRA to your Roth IRA. Do this every year for five years.

On the fifth year you can withdraw your converted money regardless of how old you are and with minimum tax liability and no early withdraw penalties. As an experienced trader, I have to say that pretty much everything you've said makes a lot of sense and should be considered by anyone going into trading.

eBooks | Get 14 Stock Market eBooks for Free

I would like to add a couple things:. I do typically avoid penny stocks, but the exception were some pot stocks that have done very well and I expect will continue to do so i. Penny stocks have much higher risk, however, so you must mitigate that risk by having a well-diversified portfolio have at least a couple stocks in every sector. I started to build my own portfolio with a plan, long term only, and I've been doing really well.

I wanted to add that you CAN buy individual stocks, you just have to research them, and diversify yourself.

All of my stock selection have a few things to meet my long term investment strategy:. This is worth SO much more. Replying to save, but while I'm at it You won't be able to employ any strategies This is kind of an odd question, but what if you specifically wanted to trade stocks?

What would make it "worth it"? I would like to think of it as a hobby where I can make money with some risk. Because although I have a degree in economics, I have absolutely no clue about investing. I feel like I have the tools and time to invest, but don't really know anything about investing.

Vanguard is most likely the best choice for a company with which to start an IRA. If you're going the Vanguard route you can put in 1k into a Roth. This is a great post. A couple things I wanted to add to the stuff that's already been said here:. Firstly, regarding penny stocks: You can find plenty of articles that go in depth on this, but the basic gist is this: Scammers put that company into a penny stock exchange. Scammers write articles praising these stocks, and post them to an extensive network that they've built of penny stock news websites that they control.

These websites are SEO optimized, so that when you do a google search for that penny stock, you find a wealth of seemingly separate websites all praising it.

These scammers also contact writers on real stock websites, offering them money to write an article praising the stock, or even just giving them an article that the writer posts under their own name. This gives the illusion that the stock is solid, when in reality it's just a shell company that even a brief glance over the company's financial paperwork Freely available on sites like Yahoo Finance would reveal its fraudulent nature.

This happens all the time. In regards to where to put your money that's actually a safe investment: If you have a small amount of money to start with too low for a mutual fund, or an account with minimum investment, like Vanguard and you aren't regularly purchasing more shares, ETFs are your best goddamn friend for getting a diversified portfolio. An ETF is basically a mutual fund whose shares are sold on the stock market. Although this means you have to deal with trade fees, it also means that there is no minimum investment, and the expense ratios are commonly significantly cheaper, Especially with Vanguard ETFs usually 0.

Get an account with low trading fees; I like TD Ameritrade's free ETF trading program, and Sharebuilder for ETFs that Ameritrade doesn't support free trading on. Use it to invest in a solid ETF with a low expense ratio.

VTI is a portfolio of US stocks with a 0. Also, enable dividend reinvestment; the exponential nature of reinvestment is extremely profitable the longer that you hold your stock for.

Also, two book recommendations: Irrational Exuberance and The Intelligent Investor. They're both great books for learning principle that will keep yourself from being sucked into the traps of speculation and hype. I learned more from this paragraph than from my entire Econ and Personal Finance class in high school. Haha, my high school Econ class was also terrible.

The only thing I learned from that was that if I argued with the teacher, I got points back on exams. I am glad to have helped you out!

If this is interesting to you, be sure to go out and pick up some of those books - they make a lot of the stock market murkiness much clearer. I love it when people take the time to explain things in understandable terms! I appreciate your effort. BEST ADVICE I COULD EVER GIVE Read the Wall Street Journal every single day and Smart Money.

Practice hypothetical portfolios and track them in Excel. This is great advice, and I'm sorry I didn't include some Lynch on my reading list. And yes, the way to learn is through hands-on practice. Another comment mentioned stock simulators, which are also useful - as long as it's understood that sometimes you get lucky on a fluke. Uhm, they're not supposed to hurt after typing that amount. I hope this was just a way of saying "gosh that was a long post" because otherwise you might want to find out what's causing it.

Nobody has a method for making tons of money from penny stocks, and if they do, they sure as shit aren't sharing it with you in a newsletter. Listen to this wo man! This should be the default answer to anyone wanting to invest in the stock market for the first time. Open an account at Vanguard and buy their index funds. Low expense ratio, great long term returns.

Over a 10 year period you are almost certain to do very well compared to more conservative investments. You don't need to diversify if you're young. I did that stock market simulation game in my Economics class and I used penny stocks to gain a tenfold profit. Granted, I used fake money, but if you played it right, you could have the possibility of making some serious money. I am a bot. Send them to my inbox! That's just a touchy-feely way of saying there's no algorithm to making money, much like success at a casino is "highly instinctual".

If there's no algorithm, no method, no technique which is demonstrably and consistently successful at least on average and which can be explained and taught, then it's all hocus pocus, all hot air. I forgot to mention that simulators are an excellent way to get your toes wet without actually putting money at risk.

Stocks are a casino. Forex is the most liquid market in the world, decentralized and low volatility. Technical analysis is easier because the currencies behave as expected whereas a stock may shoot into oversold territory for a month. I've seen 10 standard-dev events multiple times when I day-traded. You'll never see that with currencies.

As far as I know this rule was put in place specifically to prevent people from losing their asses day trading like this. That doesn't sound like a good idea. Getting into stocks does not automatically equate with making money. If you want to invest long term, just buy and hold something diversified like SPY. Then on the side make a fake paper trading account somewhere and go nuts.

To all the many people who clutter up threads with non-posts or posts like "Saving this for later" Reddit already provides a way to save it. Notice the top of the thread:. I agree with this. When I was his age I put some money into stocks that I thought I knew something about, and mostly lost money.

But overall it was a valuable learning experience. I am talking about investing here, not trading. They are very different.

Warren Buffet is an investor, Jordan Belfort was a trader. Avoid buying all your stocks in the same market sector to diversify a little. When you read Lynch's book it will be clear why. These are stocks that have paid dividends for 25 consecutive years. Also look at stocks that will soon be aristocrats, over 15 years consecutive dividends.

What you want to note is the dividend yield, it is a percentage. Also look at company debt to make sure they are not borrowing to pay dividends. For two stocks that are very close to each other, compare Return on Assets and Return on Equity to find the one with better management and buy that one.

Waiting a few months to a year will see the stock recover and start rising again. If this is a negative number then do not buy at that yield price. This math is not perfect as it doesn't account for you holding the stock for multiple years but it still works! For you this will be EE or I bonds purchased direct yay no load! EE bonds are at 0. So you would not buy JNJ since it is lower than the bond yield, but HCP is above it so it passes our test.

Using sharebuilder you will not be able to control exactly when the buy will happen, unless you pay for a dealer assisted trade and this is too much for the small buys you will be making. Since the goal is to buy and hold, small changes in price are not critical. Timing the market is very difficult, don't try to do it. This means you earn a small slice of stock that will then earn you more future dividends.

This creates a compounding effect! Be sure to set this up in your account. Before you start investing you should have an emergency fund and be liquid. Being liquid means you earn enough money to cover all your expenses. You must not get in a situation where you have to sell your investments at a loss because you need cash.

Having an emergency fund is to prevent this losing situation. If you want an advanced topic look into "Elliot Wave theory". Take a look at myRA, it's a new retirement plan that looks like it would work for your situation.

Use of this site constitutes acceptance of our User Agreement and Privacy Policy. By signing up, you agree to our Terms and that you have read our Privacy Policy and Content Policy.

Log in or sign up in seconds. Submit a new link. Submit a new text post. Useful Links Wall Street Oasis Mergers and Inquisitions Damodaran's Site Financial Modeling The Street Calculated Risk Blog The All Nighter Finance Books QFinance Macabacus Bloomberg FinViz peHUB Free Excel Templates Ontigio University of Reddit Excel Course BamSEC Other Subreddits Financial Careers Accounting Personal Finance Investing Security Analysis Investment Club Stock Market Economy Consulting Business School Business Entrepreneur Users with a moneybag symbol next to their name are moderators Flair Users are now free to add flair.

Whole Foods' CEO described his deal with Amazon as a 'dream come true' but investors want more. Why Uber CEO Travis Kalanick Was Forced To Resign. Physics MS looking to move from academia into finance. Lots of time series analysis and programming experience. This is an archived post. You won't be able to vote or comment.

First, here's what you don't do: This is the game of suckers, and is a great place to lose every single cent. Might as well play roulette. So, here's what you should do: They sound the same, they're miles apart. Read the links on the sidebar and in the wiki. Given as you're a teenager, you probably don't need to worry about things like paying rent, right? Your parents are helping out? If so, you can probably gloss over the emergency fund.

If you do have some sort of payments you make, you will first want to put aside a couple months' expenses. What if you get fired? You don't want your car repossessed! So have a backup fund like this. Maybe you do already. You've got a couple options here. It will have tremendous compounding power if you start early, and is tax-sheltered: If you're going to go this route, get it in your head right now that this money is gone.

Here are some recommendations: Your Money or Your Life by Vicki Robin, especially if you want to change your emotional relationship with money. The Millionaire Next Door by Thomas Stanley, especially if you have high expenses. I Will Teach You to be Rich by Ramit Sethi. A Random Walk Down Wall Street by Burton Malkiel, especially if you aren't convinced that index-investing is right for you. The Four Pillars of Investing by William Bernstein Total Money Makeover by Dave Ramsey, especially if you are in more debt than you want to be.

The Richest Man in Babylon by George Clason, for timeless advice. Thanks for the all the help. So Double space after then end of a line is best. If you want nice tight formatting. The fraction of household spending devoted to food for these households has not increased since the 80s. That leaves just a few options: OR Typical US households in the 80s were eating luxury food, and are now eating cheap food for half the price.

There are other direct brokers as well IB advertises a ton on TV. But I stay away from CNBC and FBN like the plague. Some examples there are a lot more, I encourage you to read some if you have the time and kind of chew on them mentally: Path to the darkside, it is.

Fear and greed drive the market and you must master your own. It was pure gambling. T he Millionaire Next Door by Thomas Stanley , especially if you have high expenses. A Random Walk Down Wall Street by Burton Malkiel , especially if you aren't convinced that index-investing is right for you. The Four Pillars of Investing by William Bernstein Total Money Makeover by Dave Ramsey , especially if you are in more debt than you want to be.

The Richest Man in Babylon by George Clason , for timeless advice. Actively trading individual stocks is much riskier but dont assume it SHOULDN'T be done, the way I look at it is the money you are putting into individual stocks, would you be very upset and very hurt financially if you were to lose it all.

If the answer is yes, don't do it. But i have my "play cash" in individual stocks, ive made some nice returns but if i were to lose it all i would say "oh well no big deal" you need to have that attitude or stay away from stocks.

Marketwatch Think or Swim Search for Practice Stock Trading or Paper Stock Trading. Nothing I am about to say is an endorsement of any particular asset allocation or purchase You can buy ETFs that: Fees are low an you will learn a lot about trading.

That is called day trading, Day trading is not implied by the question, no. There are exceptions based on personal situation see below , but yeah. Fidelity can also be a nice option. Yes, you really want to pick a good brokerage account. Here's my golden rules: Learn to be amused by paper losses. Invest in what you know I'm a huge fan of Peter Lynch In the beginning you'll have to commit to a risk, embrace it and if you lose your shirt, get right back in as soon as you can.

Invest in what you know. Keep trading fees in mind and invest on that basis. I tried options trading. It's just not a game for folks like us who start with very little because the fees become massively significant covered calls are still very attractive to me, but I won't go there until I'm holding much more per stock. Diversification is an easy way to do that, so here's my diversification strategy: Using the ideas I listed above and those from other sources, I identify a few companies with potential for growth that my own knowledge of the industry can help me understand.

This is my target list. I order them by potential for growth and select the top "L" companies.

I invest M1 in each selected company. Invest profits into the next company down on the list keep updating the list based on market conditions and your knowledge, but don't change your existing investments except as outlined below , up to the low-water mark. Invest profits as appropriate until all investments hit new M1. The amount you increase is up to you. If a stock's value drops, don't panic.

Evaluate it in terms of the market. Use comparison charts and compare your stock to an index for the market segment it's in. If they drop by substantially more than their market segment, it might be a good idea to remove that stock from your holdings. It hurts to realize a loss, but sometimes you have to. If you still believe in the company's prospects, then it can be worth taking on substantial risk, but you have to be very aware of what you're doing and how much growth will merely get you back to break-even.

Longer-term, if a stock goes for years without demonstrating the kind of growth that you thought them capable of, reconsider, and don't be afraid to swap them out of the mix. Don't do this more frequently than at most once a year. It can take a long time for a company to execute on long-term infrastructure investments and new markets and what the market does in that time can be essentially random as far as you're concerned.

Remember that you can lose everything, but that's not terribly likely. More likely, you will make some bad decisions and lose a good chunk of what you had to invest. When that happens, take your licks and carry on. There is no need to pay commissions for Australians at least, I assume other countries are the same Every little while, the Commonwealth bank gives you free trading for 1 trade.

And individual stocks have limited upside? Scottsdale is a city in Arizona. How did those people get so rich? Wish I rode that wave. I had just opened an individual stocks account: I would like to add a couple things: That last point bears repeating: All of my stock selection have a few things to meet my long term investment strategy: O'Neil is also very enlightening I highly reccomend.

A couple things I wanted to add to the stuff that's already been said here: