Tycho Press - Investing for Beginners: Essentials to Start Investing Wisely

Quick-Start Guide

Copyright 2014 by Tycho Press, Berkeley, California

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ISBN Softcover 978-1-62315-445-5 | eBook 978-1-62315-446-2

PART I
Investing Basics

PART II
Investment Types

PART III
Investment Strategies

An investment in knowledge always pays the best interest.

BENJAMIN FRANKLIN

THE WAY TO WEALTH: BEN FRANKLIN ON MONEY AND SUCCESS

If you havent yet begun to invest, its time to get started. If you already invest, you should probably step it up. If you already have more than enough set aside, realize that the word enough is at best a shoddy estimate, at worst a pipe dream.

Like so many of lifes most important tasks, investing is simple at its core. You deploy money in the hopes of receiving more back than you put in. Like paying for college to open up a career path or buying that Ken Griffey, Jr., rookie card on eBay, you deploy money in the hopes of getting back more than you originally invest.

We all understand the concept of investing. Unfortunately, way too many of us make the process more complicated than necessary.

Admittedly, some investments require sophistication and a deep knowledge of finance. Unless youve studied the markets and understand how they work, dont let a slick talker persuade you to invest in credit default swaps, option straddles, or venture capital. All three of those investments can generate profits, and all make sense for investors in certain situations. But if you cant explain the investment to someone who isnt an expert, you have no business making it. By the time you finish this book, youll be ready to clear that explanatory hurdle with most of the investments you encounter.

Part of understanding investments involves knowing how they work and what you can accomplish by using them. However, knowledge of investments will not make you a successful investor on its own. You must also understand the markets themselves, what moves them, and which moves warrant attention.

But even if you master knowledge of investments and markets, you wont make it far without another type of knowledge: an understanding of yourself, your strengths and weaknesses, and your needs and capabilities.

Investor after investor has leaped into the financial pool ill equipped for the swim. Youve probably met one of them: the guy who complains that Wall Street is rigged, or that he never gets a break, or that everyone else is lucky except him. Most of you probably know several of these tortured souls, battered and discouraged not because investing has been too tough for them but simply because they havent prepared well enough.

Never before has information been easier to obtain. At the click of a mouse, you can find not only the price of an investment but also fundamental data underpinning that price, news about the company, and in some cases the opinions of professional analysts who track the security. So separate yourself from the pack not only by acquiring information, but by learning how to use it.

THE MORE YOU KNOW,
THE BETTER YOUR DECISIONS

N ever forget that the purpose of investing is to make money. That concept sounds simplistic, but many investors get caught up in the spectacle and forget the goal of the exercise. You dont invest to impress your friends, or to make interesting dinner conversation, or to feel better about yourself. After all, didnt you come to this shindig with the intention of leaving wealthier than when you arrived?

The key to making money in the market isnt mastering esoteric financial concepts or getting in on the hot, new investment. It just takes learning the basics, keeping it simple, and not making stupid mistakes. Legendary investor Warren Buffett probably put it best when he said: You only have to do a very few things right in your life so long as you dont do too many things wrong.

Buffett may be the second-wealthiest man in the United States, but he makes a point of keeping things simple. Famous for his reluctance to invest in anything he doesnt understand, Buffett gauges the appeal of his investments in part by how effectively he thinks he could explain their benefits to his sisters, two intelligent women who dont know much about finance.