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Getting into investing/stockmarket.

MerovingiMerovingi regular
edited January 2007 in Help / Advice Forum
Quite simply, I'm interested in getting into financial investment, money management, and the stock market (all for personal means.. not as a career) but I'm completely new and ignorant on the whole topic. My goal is to eventually make some decent money so that I don't have to rely on traditional "working" for my income (which is, arguably, a bigger risk if you ask me). I realize that there is no such thing as a "get-rich-quick" that isn't shady, legal, or immoral. I also realize that my goal is something that will take many, many, many years and I'm okay with that.. I just want a point in the right direction as far as teaching myself.

Does anyone recommend any websites and/or, preferebly, books to help me started? Any tips? Any help, really, so long as it's legal and such :P

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Merovingi on

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    blanknogoblanknogo Registered User regular
    edited January 2007
    Stocks for the long run by Jeremy Siegel.

    I've only begun reading it but it has been well recommended by one of my Finance professors (who teaches a course on investing).

    blanknogo on
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    Liquid HellzLiquid Hellz Registered User regular
    edited January 2007
    If you can, take any college courses on the subject. Even a community college course would improve your knowledge greatly. Taking statistics could also help.. there are many many things you can do with numbers... probability and even the ability to accurately predict what kind of money you could be making. Also learning about how the whole system in general works (the stock market, interest rates etc) by taking an economics class would help.

    Liquid Hellz on
    What I do for a living:
    Home Inspection and Wind Mitigation
    http://www.FairWindInspections.com/
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    EndomaticEndomatic Registered User regular
    edited January 2007
    Jim Kramer from the show Mad Money seems to know what he's talking about. He was also on The Colbert Report last night.

    Watch a few shows of that, you might get an idea. Couldn't hurt.

    Endomatic on
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    Brodo FagginsBrodo Faggins Registered User regular
    edited January 2007
    From what I can remember from my econ class in terms of the stock market:

    1. You'll need a decent amount of startup money (obviously).

    2. You'll also need a stock broker. E-trade, ameritrade, all the big ones. What the process entails is that you tell the broker what stock and how many shares of it you want, and you will then pay for it. However, you have to pay them for buying it for you. There are various other brokers out there that have lower fees. My friend uses scotrade, it's about $7 per transaction.

    3. Diversify, diversify, diversify. Get long-term stocks like Altria and Johnson & Johnson. These are companies that are gauranteed to stay around for practically forever, as they produce goods that are considered household items, and as such are necessary. Don't get tech stocks when you're starting out, as they tend to fluctuate wildly and can be over-valued.

    As for money management and investing:

    1. Savings accounts, in terms of generating revenue, give you absolute shit. Even compound interest accounts aren't much better. Money markets are where the money's at. The process isn't too complicated, you give the bank the money, and they lend it out to other banks, generating interest, which will then circulate back to you (at least, I think that's how it works).

    I guess it would be wise to start a compound interest savings acount anyway, as you plan on doing this over the course of many years.

    Brodo Faggins on
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    DJ-99DJ-99 Registered User regular
    edited January 2007
    Honestly, don't listen to anybody who says they know how to beat the market. They don't. If they did, they wouldn't be telling you about it.

    No matter how experienced you get, you won't be able to consistently beat the market. All stocks are pretty much perfectly priced on a risk-adjusted basis. Plus, even if you do find a mispriced stock, there's no guarantee that you will be able to exploit the opportunity. Somebody with more resources will probably steal it away from you.

    If you want to rely solely on investments for your future income, you're going to have to get lucky. That means investing in risky stocks (usually those that are just starting up, with low book values, or in emerging markets or something). Even though you expect a greater return out of those risky stocks than your average blue-chip, there is more risk of you losing all your money. That risk is taken into account when the stocks are priced, which is what makes it so difficult to make serious money in the stock market. If there were a simple way to do it, that would mean inefficiency, and swarms of traders would converge on the opportunity until it disappeared.

    Invest in mutual funds. Good, steady returns through diversification, but you're not going to get anything spectacular. Don't invest in funds with high fees. The fees are usually not worth it (unless the fund has generated "alpha" returns for 20 years in a row or something). The majority of fund managers perform worse than the S&P 500 Index, but oh well. People still pay them for their "expertise."

    Those are just my thoughts. Don't expect to make tons of money in the stock market. If you become an expert in a certain sector or market, that's one thing, but you're probably not going to be able to do that either.

    DJ-99 on
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    MerovingiMerovingi regular
    edited January 2007
    Thanks for the replies, guys. Taking everything in and keeping an open mind.

    DJ-99,
    I understand now that I'd have to be lucky in order to rely on investments only as a means of living - very unrealistic idea, I'm sure. I suppose it's simply more like a way to increase my own, personal, income as a bonus over whatever it is that I'm doing for a living.

    I wish there were realistic ways to make money without having to work a "9-5" for someone else.. though, I could open my own business.. hey.. I never really thought about that, TBH!

    Merovingi on
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    kaliyamakaliyama Left to find less-moderated fora Registered User regular
    edited January 2007
    Well, if you really want to live well off of the stock market, become an investment banker after college. Base salary is 60K and bonus usually puts you at about 140k/yr right afterwards. You do it for a couple of years, then go get an MBA and make 500k-50 million at a hedge fund or private equity environment.

    Me, I couldn't handle 80-100hr wks on excel spreadsheets, and don't have the math background for it.

    My retire-early plan is basically to make a modest six figure income for five or six years (100k-250k) and try to sock enough away while owning most of a house, then working somewhere more fun and easier on a smaller salary until my investment accrues. Realistically, if I have kids, that's 40- but that's 40 years of doing what I want.

    kaliyama on
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    dsplaisteddsplaisted Registered User regular
    edited January 2007
    A good website for traders is elitetrader.com. The forums are very active and there are a lot of knowledgeable people there. Apparently there are people who actually do earn a living trading. I'm not sure I'd recommend trying it yourself though.

    dsplaisted on
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    ThanatosThanatos Registered User regular
    edited January 2007
    dsplaisted wrote:
    A good website for traders is elitetrader.com. The forums are very active and there are a lot of knowledgeable people there. Apparently there are people who actually do earn a living trading. I'm not sure I'd recommend trying it yourself though.
    Most people who earn a living with their own money on the stock market are retired, and have made that money through more traditional means.

    To make any real money on the stock market, you have to have money in the first place.

    Thanatos on
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    Liquid HellzLiquid Hellz Registered User regular
    edited January 2007
    Thanatos wrote:
    To make any real money on the stock market, you have to have money in the first place.

    Very discouraging and sad, but very true as well. :(

    Liquid Hellz on
    What I do for a living:
    Home Inspection and Wind Mitigation
    http://www.FairWindInspections.com/
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