30 Beginner Tips on Investing

What to know before you tackle the stock market

Photo by Austin Distel on Unsplash

The stock market is not gambling. There are definite rules, structures, and patterns where you may be able to “predict” a stock’s movement by using technical analysis. However, there are many unpredictable things, like a pandemic, the health of a company, or the CEO. Think about the rise of Zoom and online shopping in 2020. How the travel industry sank. Or how Elon Musk tweeted “DOGE” and the crypto coin soared.

Over the past ten years, I had amassed a layman’s knowledge of stocks, meaning I knew how to buy them. My decision to learn about the “market” stemmed from wanting to understand exactly what was happening to my money when the market went up or when it dropped.

Here are my 30 Beginner Takeaways:

1. If you think you know a lot, don’t let your ego get in your way.
2. You are never too old to start investing, but the younger you start, the better off you’ll be (see #27 on compound interest).
3. Companies can be publicly traded or privately owned. When a company is public, the shares may be available for purchase.
4. Each stock is listed on an exchange with its own symbol, called the ticker symbol. Some of the ticker symbols are shortened letters of the stock, such as TSLA for Tesla, or AAPL for Apple, but you also have the more creative names like LUV for Southwest Airlines or HOG for Harley Davidson.
5. Find a website, like Investopedia, a YouTube channel, or google “Best Investing Books” and start there.
6. There are lots of people trying to sell you courses on investing. Start with the free ones first.
7. Pick five solid stocks to follow. You can pick tech stocks, EV stocks (electric vehicles), semi-conductor, biotech, etc. Pick a healthy company overall, not one that is continually down.
8. Use apps like Yahoo Finance or CNBC to get a quick daily pulse of the market and the stocks you are following.
9. Research the stocks you like. Did the company just create a new product? Is the CEO reputable at running a good business? Does the company have a lot of buying power or debt? Were their past earnings positive?
10. Earnings are the company’s profits in a given quarter or fiscal year. Earnings can be positive or negative based on news about the stock or the management of the company.
11. Look for connections between stock and current news. When Pfizer (PFE) first announced a potential COVID vaccine, their stock shot up. So did a few other pharmaceutical companies who stood to profit. What stocks dropped? Amazon, Zoom, and other stocks that made out like bandits during COVID.
12. Learn the movements of your stock picks as the price goes up and down. Does it move a lot during the day? A little? Pay attention to the movements and jot down notes in your trading journal.
13. Keep a trading journal. Notate the things you learn and news about your stock picks. Once you begin to buy stocks, track your emotions on why you picked that stock.
14. Open a trading account with a small amount of money. There are tons of investment firms you can use, like E*Trade from Morgan Stanley, Charles Schwab, TD Ameritrade, and others. Do your research and stick with a reputable firm.
15. Most of the bigger investment firms offer paper trading or simulation (sim) accounts for you to practice buying stocks. In a perfect world, you would paper trade for six months. Get your mistakes out first by sim trading.
16. Day trading refers to trades placed in one day, swing trading to trades over days/weeks/months, and buy and hold is long-term trading, typically years.
17. To accumulate wealth, buy and hold stocks. While there will be downtrends, corrections, bumps, and catastrophic events like pandemics, overall, the market continues to rise.
18. If you aren’t buying and holding, expect to lose money. Charlie Munger of Berkshire Hathaway said, “The big money is not in the buying or the selling, but in the waiting.”
19. If you have already an investment account, take advantage of your site’s educational piece. In my case, I had an online trading account for years and only recently realized they had a whole section dedicated to financial education.
20. Don’t buy stock on a tip from a friend (unless your friend is Warren Buffett). Do your own research.
21. Don’t let FOMO be your guide. I’m looking at you, GameStop.
22. Look to buy a stock when it is having a down day. You’ve heard, “buy low and sell high,” but most people will follow the crowd, potentially buying a stock when it is too high.
23. Don’t wait too long to buy, as your stock may never drop to a lower price. If you love a solid company, like Apple (AAPL), just buy it.
24. You don’t owe taxes until you sell your stock (capital gains).
25. Penny stocks are stocks that trade under $5. While you might get lucky on a penny stock, they are typically considered high-risk.
26. You don’t have to buy an entire share of stock but can buy a piece of it, called a fractional share. This is great news for a high-priced stock. Note, not all brokerages offer this option.
27. Compound interest is “earning interest on interest.” If you leave your money in stocks for the long haul, the initial amount invested will increase substantially. Learn how “compound interest” works.
28. Once you learn the basics, expand your knowledge with a reputable course. You can find expensive or cheap classes, but only spend what you can afford. After several months of self-study, I paid for a class because I wanted advanced knowledge. While the information was good, the course’s online community was priceless.
29. Create a trading plan — find a strategy that works for you and stick with it.
30. Whatever you think you know, there is more to learn.

Learning about investing can be intimidating, but it is your job to know what’s going on with your money. It’s never too late to start. Before you know it, you will become a wise, and, hopefully, wealthier investor.