So if, even after taxes and your own frivolous spending are out of the way, you’re still lucky enough to have a pile of your hard-earned cash in your possession, now might be a good time to count your lucky stars and then start making some long-term investment plans for that extra money. And while stuffing your mattress with crisp $20 bills may ease certain tactile desires, your nest egg won’t be getting any more hefty. That’s where smart investments in the stock market come in.
Many newcomers might be turned off by the idea of putting their surplus money into the stock market, mainly due to fears over the inherent instability of the market as a whole or, worse, the complexity of figuring out what investments will turn out fat returns that will feed their retirement plans while they’re still able to work.
But really, neither of these two things are any reason for prospective investors to turn away. Quite the opposite, in fact. While the volatile nature of investing in stocks will probably never go away, ups and downs in share-prices for companies are how you’re going to make the big bucks. And while putting your money into winning companies is by no means an exact science (if it were we’d all be rich by now!), even beginners can make wise investments by following two basic steps:
- Researching smarter, not necessarily just harder.
- Staying informed on current events in the investments and financial world.
Hitting the Books
The most important aspect of any research assignment is to do your reading, and the same holds true for smart investing. Not only will general research on the stock market help you get your bearings– especially if you’re new to investments– it will likely introduce you to a few major players that you may want to consider putting your money behind. Of course, there’s a baffling amount of investment resources out there on the web, which makes it hard to decide who to read and, more importantly, who to trust! Here are a few of the most venerable names that any beginning investor should get to know:
- The Wall Street Journal
Despite the fact that you’ll find plenty of traditional news-reporting and published editorials that may or may not match up with your particular political stance, remember that money, numbers, and companies usually have relatively little to do with politics. The Wall Street Journal reports on the financial state of Wall Street first, and politics second. WSJ is still available in print for a traditional subscription price, but it is also offers both a free online edition, as well as a web-subscription for its premium service. - The Motley Fool
Don’t take The Motley Fool’s name the wrong way; they’re anything but foolish. Their site is solely for independent investors, and is designed to be the perfect tool for the investor who believes that he or she can manage a successful financial portfolio without the help of a professional financial investment service. The site also publishes plenty of editorials and guides specifically for beginning investors. - MSN’s Stockscouter
Stockscouter is a daily blog managed by the MSN Money team, and it covers major issues in the financial market. The site is also a valuable resource for beginning investors since the site is a central hub for plenty of useful resources, including market and company analysis pages as well as recommendedations for new investments.
Following the Trends
Nope, I’m not talking about a return to the painful social anxiety of adolescence. Smart investors– even beginning ones– will constantly stay on top of broad trends within the markets. This encompasses everything from the most recent numbers coming out of the Federal Reserve to the latest spending habits of consumer culture both domestically and abroad. The world of investments is incredibly vast, and almost everything has a direct influence on something else. Once you get comfortable with publications and news sources like the ones listed above, remember to keep your eyes peeled for:
- Major news events! News regarding big-name businesses as well as national financial conditions. Although both of these things might get a little overwhelming to track, do your best to get a general understanding of what’s happening, since both big companies and national finance tend to directly drive the stock market, for better or for worse.
- The next big thing! Remember that even current stock-market behemoths like Microsoft, Apple, or Google all had to start from something. If you’re plugged into current events in the market, you should be able to keep your finger on the pulse of major industries. New companies that offer an innovative product, service, technology, etc. should pop up on your radar pretty early. If the idea seems like a real winner, the company might be a great addition to your investment portfolio!
Of course, there are many finer points to succeed in the art of investing in the stock market. Establishing a feel for when you should cash out your stock investments and when you should stay in, finding a reliable stock broker or investment service, learning the best ways to keep track of your stocks, all of these are more complicated aspects of investing. But the most important thing to remember is that none of these things should deter you from teaching yourself how to buy stocks.