The market $SPX500 opens a little higher today. As for our portfolio, we start the day in red with our $OIL stocks down. $SWKS and $AAPL are the two best performers in our portfolio today.
Stock Market For Beginners 2020 🐣
I started investing four years ago and I made a lot of mistakes. In the first six month, I already lost over $600 from a $2000 investment. Here are some of the advices, I would have given to my beginner investor self to help him start:
Step 1: Know who you are
Are you going to be an investor or a speculator?
Speculators use technical analysis most of the time looking for trends and patterns. There are different types of speculators for example, day traders and swing traders. Usually, speculating demands a lot of money to start.
Investors are more successful than speculators and I will suggest that you become an investor as a beginner. Investing means owning businesses. When you are buying a stock, you're actually becoming an owner of a business.
Step 2: What type of investor are you?
Are you a defensive or enterprising investor? Most beginners should be defensive investors. Defensive investor don't have much time to spend researching stocks. They are better off just investing in index funds and ETFs.
Enterprising investors don't take more risks than defensive investors, they just spend more time doing research. If you have another job, it will be hard for you to be an enterprising investor. I am an enterprising investor and I spend over 80 hours a week doing research.
Step 3: Invest in yourself
You need to read as many books as possible about investing for beginners, watch YouTube videos, buy courses. All of that is important so that you don't make mistakes later when you're actually investing
Step 4: Find a broker
I use eToro but there are other brokers available nowadays with zero commissions. In the US, there's Robinhood, Webull, M1 finance. If you want a more personalized and professional service, then you can opt for a traditional broker but be careful with fees and commissions. Also, be careful with taxes. You should know about short-term and long-term capital gain taxes in your country.
If your broker suggest things such as margins, leverages, options, short-selling, etc to you, don't use them. These are not for beginners.
Step 5: Find investments
Invest in what you know. Learn about a particular industry and then you look for investments there. You should also know your circle of competence. The best website to use to get information about stocks is Yahoo Finance.
To get more details, you will need to go on the investor relations page of a particular company to read the 10-K and 10-Q forms and other documents. You will have access to the balance sheet, income and cash flow statements. That's why step 3 was so important. The only way you can read a balance sheet is if you have leant how to do it.
Step 6: Build a portfolio
I suggest that you start with 10-15 companies, mostly big companies with market caps of more than $100 billion.
Step 7: START
The best way for you to learn is to start. You'll make mistakes for sure, but you have to start. It has never been easier to start. You can start investing with $100 today and there's so much information available for free to help you.
Watch the full video on YouTube:
You can check out my portfolio for beginners here:
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