4 ways to learn the ropes as a new investor

There may have been several reasons why you have not yet taken the bold step of beginning to invest, and one of the more common reasons may be a lack of knowledge. You may be aware of the possibility of experiencing tremendous financial loss as well as gain. Even savvy, experienced investors are at risk of major loss. Your inexperience and lack of knowledge may create a feeling of trepidation, but the good news is that you can gain more confidence by educating yourself about different types of investments, strategies and more. These are some of the more common ways to learn the ropes as a new investor.

Use the internet

The Internet is one of the easiest ways to access investment tips and guidance, but be aware of the source that you are using. For example, avoid selecting stocks based solely on a hot tip from one article. Instead, use the Internet to learn how to select stocks yourself. You should be able to determine for yourself why a specific stock is or is not a great option, and you should also explore other comparable stock options as alternatives. While you can read articles on topics like price-per-earnings ratios, dividends, ETFs and more, you also can use online calculators, stock analysis pages and more to further educate yourself about different investments.

Read books

Online articles are a convenient source of quick information, but the short length of most articles makes them inadequate for gaining in-depth knowledge on specific topics. You may begin your book-based education by reading a few beginner investment books, and you can then expand your reading library to include books focused on one specific topic. For example, an index fund may be covered in a single paragraph in a beginner investment book, but you may also be able to find an entire book on index funds that goes over this topic in intricate detail. As is the case when gaining information via the Internet, pay attention to the source. Some books are written by highly-educated and successful financial gurus, and others are written by common investors who happen to have gotten lucky with their picks.

While online articles are short and convenient reads, books can offer more in-depth knowledge on a particular subject that you want to learn more about. (Source)

Take classes

You may also prefer to gain more in-depth knowledge from different sources, and a smart alternative is to take a few investor classes. You may find several live classes in your area, such as through a community college. There are also online classes, such as through Options Animal and other sources, that may provide you with a convenient way to obtain a formal education about different types of investments. An alternative to a formal class is an investment group, and some of these groups may provide educational support to new investors like you. They may also attend classes together or pay for experts to visit group meetings.

Use a stock market simulator

Before you use your own funds to purchase investments, you may gain confidence and knowledge through a stock market simulator. There are multiple simulator tools online that may be effective resources for you to use. Research these simulators carefully. They vary based on their cost as well as their educational features. You may also find free simulators through some online brokerage firms, but you may need to have an established account in order to access this feature.

While each of these educational resources may help you to gain knowledge and even experience as a new investor, you may still not feel confident making investment decisions using your own money. Remember that you do not need to invest a large sum of funds initially. Instead, you can make smaller investments to get real-life experience, and you can gradually increase your portfolio as you gain confidence.

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DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.