Thursday, July 2, 2009

Now Might be a Good Time to Learn About Stocks

It's hard to go anywhere these days without hearing horror stories about the economy. Many long time investors and retirees have suffered huge losses as the market reached record lows. On the other side of the coin, if you have never invested in the stock market before, then you've never lost anything, and now might be an exceptional time to learn how it all works.

The market will have to recover sooner or later, and right now you can pickup shares at a fraction of the cost, compared to what most shareholders paid. Rumors are also starting to circulate about the economy beginning to recover, but there is no way to know if the worst is over. Consider investing a small amount of play money, that will not lead to your demise if lost. The odds of financial gain in the stock market are much better than going to a Casino or buying lottery tickets and can be just as exciting.

It's impossible to know everything about investing, and learning the basics can be intimidating. A good place to start is CNN's Money 101. It contains a wealth of information on various financial topics, and Lessons 4-5 are specific to Investing. When I started Investing not too long ago, I simply opened a Roth IRA at, which I found to be the cheapest at $4.95 per trade, and invested $100.00.

I decided to invest in Ford (F) purely on intuition, and was lucky enough to more than double my investment over the past 3-4 months. As a 28 year old, with hardly any money, it was a great way to get my feet wet. I also made a few mistakes as seen in my article Stop Order vs. Limit Order, but it has given me the drive to start learning more and more about how the stock market works. I am now exploring more advanced trading techniques and learning what to look for in companies.

The most important rule when starting out is: to realize that you don't yet know what you're doing, and should never invest more than you can afford to loose. It is also important to realize that paying off debt usually is a better investment than trying to earn a return on stocks.
Overall the stock market really isn't that scary, and by getting in now, you might make a pretty penny when the markets recover.

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