What is the best way to get started investing in the stock market for someone who has no experience in this?

Question

Should you invest in something that you have some knowledge in or just what appears to be a good investment? Is it really good to buy low and sell high? How do you know if something that you buy low will pay off? How do you avoid losing money?

Answer 1

It depends on whether you want to speculate or invest. If you just want to speculate, buy something you think is cheap and if it goes up, sell and you've made money. If it goes down, you lose money.

If you really want to invest, you need to educate yourself by reading lots of information. Below are a couple of websites I highly recommend. Personally, I subscribe to the buy-and-hold strategy because the time value of money is the best way to make a lot of it.

Note: on the second website for Scott Burns, look at his couch-potato formula for a system that will beat 70% of all other funds. It's a near-guarantee to be above average and what more can you ask for?

Answer 2

There are a few ways, but the best way is up to you. You can pay for a stock broker, or buy books and/or Cd's, to learn about how to invest. The most important advise is to do your homework, and don't make any emotional decisions. Invest what you are willing to lose and start small. Don't invest in anything that someone told you about without doing your own homework. In the stock market it is high risk, so you can not avoid losing money. There is always that possibility. It is not how to avoid losing, it is to invest what you can afford to lose, so that if you lose it, it won't be a big strain on your financial life. If you gain from it great, but you will not gain as much if you invest less. Questions you need to answer before going into this market are? How much money am I willing to lose, and how much time do I have to invest in watching the market and learning about my potential investment. I hope I was helpful.

Answer 3

There are lots of ways to do this--anything from taking a course taught by a professional to getting a broker who will help you--for a fee of course. Or you could do it on your own by reading books and investing by yourself. Start with what they call "penny stocks" do the research and buy a few and then watch what happens. A penny stock is one that costs very little per share so there's not much risk. Buy only a few shares. This way its an inexpensive experiment. If you make a few bucks reinvest them in something else and build a small portfolio.

I invested in a small unknown company back in 1974--Subaru of America--it was a big $35 investment. I sold the shares in 1980-- for over $700. Had i bought a lot of shares originally, I might have made a lot of money. But the point is I didn't lose money and I picked a winning company.... it can be fun an risk free when you are dealing with little capital investment....

Answer 4

Along with what everyone else has said, remember to only invest money you can afford to loose. The stock market, and particularily the options market, flucuate a lot. Also plan on keeping your money in the market for a long time.

That said, before you start putting money into the market, I would suggest 2 things. Start a portfolio on Yahoo, and track some sample investments. Do all the work you would normally do, just do not actually by the stocks, and see how you do. Secondly read everything you can find - wall street journal, buisness week, internet news, Motley fool books, other investment books, anything else you can find. There is a lot to get educated on, a lot of different ways to invest - all depending on the ammount of risk you want to take.

Answer 5

With a relatively small amount of investment knowledge and a desire to participate in the market, either ETFs (exchange traded funds) or broad mutual funds are the best avenue. Especially for low dollar amounts. This investments provide broad diversification and eliminate the majority of unsystematic risk associated with individual stock holdings. The portfolio's participate in the market, but there is no need to continuously monitor the holdings. Mutual funds offer active management by investment professionals for a relatively small fee (if you actually compare fees). Select a certain dollar amount you would like to invest each month or so and track the fund or ETF that you invested in. There is no better way to learn about investing that just jumping in. GOOD LUCK.

Answer 6

how you could start up making an investment in stocks is to make investments in what they call an substitute traded index (ETI). An ETI is a equipment of stocks that are reminiscent of those in a inventory index, like the Dow, Nasdaq, or S&P500. you could then purchase stocks of those indexes as although you've been making an investment in a mutual fund. except that your ETI will song precisely to the index that's in step with. the clarification it really is a good thanks to start up is that you're literally not having to wager which particular stocks will do nicely and putting all of your eggs in that one basket. with the help of making an investment in the ETI, you could watch the performance of all the stocks and get a sense for the way the inventory marketplace works, without putting all of your money in probability in a unmarried position. Mutual money are also a good funding. it is the position a brokerage (like constancy or forefront, for instance) hires fund managers to create funding applications out of stocks of assorted kinds of stocks that they imagine will do nicely over the years. And, this can be any crew of stocks the fund managers chosen. that's, they are not tied to any particular index. the prospect the following isn't any matter if the managers know what they are doing to the position their mutual fund can a minimum of shop %. with or outperform the substantial indexes. yet, there is also the aptitude of more advantageous reward.

Answer 7

Sharebuilder.com

In short at sharebuilder the basic plan is no monthly fee but you pay $4.00 per stock for the transaction fee. Plain and simple. You set up what you want to purchase and the fee is per company.
For instance.
If Wal-mart was $20.00 per share on the date they purchase stock and you said that you wanted to invest $100.00 the following would happen:

They would take the $4.00 fee from the $100 so you would have $96.00 left then on the Tuesday then they would purchase $96.00 worth of stock. So you would end up with 4.80 shares of stock. Yes, you see correctly fractional shares!

We set up this for our children and when they get some money we transfer it from their checking account and they pick out what stock they want to buy.

The thing to remember is the $4.00 fee is per company not per share. So whether you want to spend $1000 or $20 on a particular stock the fee is $4.00. So if you had $100 and you want Sony and Home Depot equal dollar amouts you would get:
$46.00 of Sony
$46.00 of Home Depot

I love sharebuilder becase the basic plan allows you to do it when you have money and you don't have to buy a whole share at a time.
We started our son 10 year old son out with Atari and our daughter 12 year old with Mattel. They got interested because their favorite toys come from those companies. That totally got them hook, line, and sinker. My son just bought a boat load of Atari because it was only $0.50 cents a share he spent $54.00 and got 100 shares!

sharebuilder is a very well known broker like Schwab and e-trade.

Costco offers free money in a sharebuilder account.
Go to costco.com and click on services at the top.Then scroll down you will see it.
Every time they had an offer we opened up a new account.
We started with ourselves and then started each child one at a time. They often have a $50-$85 deal where if you make just one transaction they will put "X" amount of $$$ in your Sharebui8lder acct. We have done it so far 5 times. It has actually made us money tecnically and has easily covered the cost our membership. When you get your passport coupon books from Costco every 3-4 months they have a coupon in there.

sharebulider has a lot of info as well. And if you don't know what something is the have a glossary.
Hope this helps!

Answer 8

Don't do it. Seriously. The stock market is completely unstable right now and any stock could crash overnight. You need to acquire as much stock investment knowledge as possible before tossing your bread on the waters.

Answer 9

the best way to start of with markets is to watch TV. especially business channels and news.
and never enter the stocks based on the company .. make sure u know the insdustry also very well.
and then drill down ur decision to the company and then discount the news in the market.

happy investing