How Do I Start Investing?

Introduction

The purpose of this writing is to detail sources of investing information I find useful. The items are grouped as follows:

• First Steps
• Second Steps
• Third Steps
• Forth Steps
• Fifth Steps
• Safety Valves
• Reading
• Footnotes

The following material is based upon my education, experience, interests and research. Opinions are mine. Understand that this material is not to be taken as professional advice, and you must do your own due diligence. I have been retired for a number of years now, and fortunately have the luxury of time to read, listen and watch. I did not work in the financial industry, nor was I a CPA. I consider myself a news junkie and a techie (first personal computer in 1979, first mobile phone in 1991).

First Steps

• Have enough money to begin investing in the markets or cryptocurrency. Consider reviewing at least some of the major tenets of personal finance, such as a multiple-month living expense safety net (rainy day fund) and paying off high-interest debt, e.g., credit cards, before beginning investing.
• Go to MoneyChimp and similar websites for introductions, overview and basics of personal finance et al.
• Begin to set aside a sufficient amount of money to open a brokerage account. I consider $1,000 or more as a minimum amount to do so. Lesser amounts, e.g., $100, 500, are insufficient to invest effectively. (The entire initial amount need not necessarily be invested all at once or in one stock. Rather it allows diversity in stocks, both in types of companies and timing of purchasing stocks.)
• Consider investing as a lifelong learning experience.
• Consider investing only the money you can afford to lose. Risking monies set aside for other obligations, such as but not limited to safety net and college funds, is not recommended.
• Consider investing in stocks as part of an overall strategy that may include participation in employee retirement plans, payroll savings plans and IRAs. There may be tax advantages to be had; your employer's human resources department should be a likely first resource.
• If investing for retirement, consider using an Individual Retirement Account (IRA) as part of your strategy. Age and income, present and future expectations, and restrictions on early withdrawal may factor into your decision. Your broker (discussed below) should help sort out your options.
• As you study the "how to", be aware of and recognize there are differences in philosophies and approaches to investing (longer time periods) versus trading (shorter time periods). Definitions may vary, and the writer's choice of adjectives may be confusing.
• Be aware of and recognize that stocks are just one type of investment product. Other product types include but are not limited to electronic traded funds (ETFs), index funds, mutual funds and bonds; you may choose to include such products in your holdings. (I use the term "stocks" generically, where applicable, to apply to all investment products in the discussion below.)
• Be aware that trading stocks as a novice is most likely a recipe for disaster. Day trading is not recommended. The literature is replete with evidence that the vast majority of those new to the market quickly lose significant amounts of money. Do take the time to read and study first and reserve the exploration of day and short-term and options trading for later.
• As a decades-long conservative investor, i am not trading forex or cryptocurrrencies. While i follow the topical news, other persons and organizations offer better information in these areas. If that is what you seek, I would refer you to the Wiley and For Dummies books before wandering off into the myriad of websites and chatrooms. Get a grounding and weed out those that would relieve you of your funds.
• And an aside. One sees numerous posts asking such variants of questions on doubling an investment in a short period of time, how to turn a small four-figure investment into a million dollars, a list of guaranteed no-risk stocks, the "best" stocks to buy now for the next some number of years, what is the easiest way to make money and other unreasonably outlandish ideas. In my opinion these all are just noise. While there is nothing wrong about asking questions, generally my impression is that the writer hasn't attempted even a modicum of research on the internet or in a bookstore or library. As you begin your own journey, I suggest you do not be distracted by such outlandish postings.

Second Steps

• Go to (and bookmark for future reference) Investopedia for introductions, terms, references, dictionary, and encyclopedia. It has a Wikipedia-like format.
• Consider taking an introductory course or two at at an adult evening school or a 2/4 year college.
• Read a few introductory "how to" investing books published by Wiley including their For Dummies series found in most larger bookstores, where one can browse (and look at the author's writing style), and online. Well-indexed, these books also serve as a reference. (I prefer print books in hand compared to ebooks but that's me.)
• Visit your local library; some libraries have online loans using software/apps. Libby is one software example.
• Use search engines (Bing, Google, Yahoo, et al). Have a question? Try typing the complete question into the search dialog box. The (Google) algorithms that parse a sentence or phrase as a search query are quite amazing.
• Don't give up. If these first two steps absolutely won't work for you, see Safety Valves below.

Third Steps

• Consider reading the Bloomberg, CNBC, Marketwatch, and Reuters Business websites on a daily or frequent basis.
• Use Investopedia as a reference and dictionary to look up terms and vocabulary not understood.

Fourth Steps

• Chose a broker. There are a number of websites—exemplified by StockBrokers—that review brokerage firms, but consider the timeliness and bias in reading reviews. Competition among brokers results in brokerage website and mobile app features changing rapidly, as do services and fees. Rather than accept such writings at face value, consider using such reviews and articles to formulate your questions to be asked when investigating opening an account.
• The cheapest or online-only broker isn't necessarily the best choice, especially for one starting out. For a number of reasons including face-to-face service and help with forms, applications and other documents requiring signatures, consider a broker that has a brick-and-mortar storefront (e.g., in the USA, Fidelity, Schwab, TDAmeritrade, etc.) near you.
• Consider visiting the broker's office to talk with a representative to talk about their services and website. Discussion items may include the features and usability of the website from both the perspective of a beginner and an advanced user, trading fees, research and analyst reports, education, training, banking services, IRAs and the like. Are you made to feel comfortable in the office? If not, move on to a different brokerage firm.
• Consider thoroughly exploring the broker's website, with special attention to the research section (including its stock screener, analyst reports and news coverage), to take full advantage of all the information within. The consistency of the presentation within the broker's website should be less confusing, facilitating comparing information across companies, than navigating the differing formats of the myriad of third-party websites.
• Do take full advantage of the training material, seminars, webinars and discussion forum offered by the broker of your choosing. Some offices have seminars on site, other brokers offer webinars on line, and some firms have both.
• Recognize that one only requires the broker's website or mobile (Android/iOS) app to buy and sell. Other third party websites and mobile apps only may provide news and prices of interest.
• If using a mobile device on a public WiFi network to access your brokerage account, recognize your account login information and security is at risk. Turn off the device's WiFi and use the cellular telephone network instead.
• Have trouble finding an office in your area? Use Google Maps and search for "stock brokers" or similar phrases. If that does not help, as telephone books are almost extinct, ask the manager of your local bank, Better Business Bureau, or chamber of commerce for references.

Fifth Steps

• Consider putting as much additional money as you can afford into your brokerage account to buy more shares. Note that doing so does not necessarily mean one should immediately purchase shares; opportunities may take time to evolve.
• Consider your risk tolerance when doing due diligence on choosing a stock, ETF or other investment product.
• Are you interested in or own shares in a company? Go to the investor relations and/or press relations page(s) of the corporate website and sign up for the email notifications of interest to you. You should be among the first to receive notices of SEC filings, product and services announcements, earnings and dividends.
• Recognize the basic differences between fundamental analysis and technical analysis. Both methods are useful in doing your due diligence; one method to the exclusion of the other is not necessarily the right course of action.
• Investing for the long term? Consider dollar-cost averaging and automatic dividend reinvestment. The compounding quickly adds up.
• Assuming all continues to be well with your choices, don't necessarily be in a hurry to sell. (It is not to say one should not take profits if appropriate.) Short-term and day-trading is at best stressful and may well result in loss of principal. (As you gain experience, then begin to explore such trading if you feel comfortable doing so.)
• Consider paying attention to rotations among market sectors and perhaps adjust your holdings accordingly if necessary.
• Be wary of "sure fire" and "guaranteed" investing strategies or methodologies or "top" stock picks surfacing on websites and in your email inbox. If it sounds to good to be true…
• Don't waste time with penny stocks. Penny stocks are akin to juggling sharp knifes while blindfolded. The road is strewn with pump-and-dump boulders rolled out by those who would relieve you of your funds. Save your money and invest wisely in stocks of companies with proven track records.

Safety Valves

• Are you confused, frustrated, bored, lack the time, over your head—whatever the reason—or just don't care about or like managing your money, investments, and retirement planning? Find a fee-based (not commission-based) financial advisor using a phone book, library resources, Better Business Bureau, or references from your bank. Interview for a good fit.
• Have the fee-based financial planner lay out a plan that meets your perceived needs and that you can follow with minimal stress and fuss. Be prepared to show recent tax returns, a list of long-term obligations (mortgage, home and vehicle loans, student debt et al) and a household budget.
• Recognize that a financial plan should not be static. The plan probably should be reviewed and perhaps changed or updated as one ages and significant life events, e.g., career changes, marital status, dependents, real property acquisition, occur.
• Should you also choose to hire an investment advisor, choose a registered investment advisor with a Series 66 license—a person who has passed an exam by North American Securities Administrators Association (NASAA) designed to qualify candidates as both securities agents and investment adviser representatives—working in a managed platform that charges a nominal annual 1% (or not much more) commission as opposed to commissions.
• Confused about types of financial specialists? FINRA (Financial industry Regulatory Authority) offers an unbiased explanation and resources to help.
• As you may not pay attention to tax forms, end-of-year statements, and IRA options, you may want to hire a tax accountant (interview for a good fit) to protect yourself from making mistakes. Be prepared to show the tax accountant the last few years of your federal and state tax returns. Be prepared to possibly identify and track unusual business/work or medical expenses.

Footnotes

• Consider taking notes, including questions to be asked in a class, forum or chatroom or of your broker's customer support, as you advance your knowledge. Paper and pencil works, but a cross-platform (desktop and mobile) software solution may be a better choice. Obviously there are numerous organizer and note-taking products—including a word processor or text edtior—to choose from, and flexibility and breadth of capabilities vary. If you opt to try a few products, a hint: ensure there is a compatible file import and export capability so that notes can be moved to a different product without rekeying.
• I prefer and use the cross-platform Evernote product for its note-taking, webpage (e.g., articles, email) and photo capture, tagging and so much more, but that's me. There is a limited free version; i opted for the full version that has a small (compared to my investments) annual fee.

Readings

Suggested readings (not inclusive, not ordered) on philosophy, concepts, strategies et al. Check your local library, including its online loan service.

• The Intelligent Investor by Benjamin Graham with Jason Zweig
• The Only Investment Guide You'll Ever Need by Andrew Tobias
• The Bogleheads' Guide to Investing by Taylor Larimore, Mel Lindauer, and Michael LeBoeuf
• A Random Walk Down Wall Street by Burton G. Malkiel
• What Works on Wall Street by James P. O'Shaughnessy
• All About Asset Allocation by Richard A. Ferri
• Common Stocks and Uncommon Profits by Philinp Fisher
• Stocks for the Long Run by Jeremy Siegel
• Common Sense on Mutual Funds by John Bogle
• Irrational Exuberance by Robert J. Shiller
• How Markets Fall by John Cassidy

A few suggested readings (not inclusive, not ordered), more to the point of how-to reads, of Wiley and their For Dummies offerings are examples of books readily in book stores and available on line. Note the Wiley and For Dummies books are less expensive at retailers, and epub-format books are available at even less cost.

Are there other books that could be recommended? Sure. Look to your local and college library. And look here

Conclusion

In conclusion, these comments are assembled from multiple tagged notes in my Evernote account. I apologize in advance for grammer and syntax that may not be consistent, and the tablet's autocorrect may have tripped me up in places. Nevertheless I hope this information helps. Your mileage may vary.