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How to Invest in Stocks

Everyone wants to be financially secure. If you have a house, your house may be your biggest “asset” early on, but you will need to live in it for the rest of your life. Do you want a financially secure retirement or a vacation house in the South Pacific? You must invest your savings if you plan to retire comfortably. Following are some steps which you should follow before investing your real money. Step 1: Save Before you can invest, you need money. Don’t start investing until you have a secure job and six to twelve months of living expenses in a savings account, as an emergency fund, in case you lose your job. Learn how to budget your money and to spend your earnings wisely. Most investors have to be careful not to spend any of their profits, and to keep some aside for future use, and for retirement, as well as emergencies. Before you can invest, you need money. Don’t start investing until you have a secure job and six to twelve months of living expenses in a savings account, as an emergency fund, in case you lose your job. Learn how to budget your money and to spend your earnings wisely. Most investors have to be careful not to spend any of their profits, and to keep some aside for future use, and for retirement, as well as emergencies. Step 2: Read Before you start investing, you need a basic understanding of what a stock is, what it means to invest, and how to evaluate stocks. Get some basic books in stock investing. Aim to read every book on investing you can get your hands on. Here are some of the very best books and resources for all serious investors: The Intelligent Investor by Benjamin Graham. Get this on audio CD, listen to it a few times and it will make a lot of sense. Focus especially on Chapters 8 (market fluctuation) and 20 (margin of safety). The Interpretation of Financial Statements by Benjamin Graham and Spencer B. Meredith. This is a short and concise treatise on reading financial statements. Security Analysis by Benjamin Graham and David Dodd. This book is considered the bible of investing and will tell you how to analyze corporate finances thoroughly. You don’t have time NOT to read it. Get this book now, and master everything in this book. That being said, due to its age (it was published in 1934, just after the stock market crash of 1929), it lacks some modern aspects; in particular, it does not tell you anything about the cash flow statement. Expectations Investing, by Alfred Rappaport, Michael J. Mauboussin. This highly readable book provides a new perspective on security analysis and is a good complement to Graham’s book. Common Stocks and Uncommon Profits (and other writings) by Philip Fisher. Warren Buffett once said he was 85 percent Graham and 15 percent Fisher, and that is probably understating the influence of Fisher on shaping his investment style. One up on Wall Street and Beating the Street, both by Peter Lynch. They are easy to read, informative and entertaining. The Essays of Warren Buffett, a collection of Warren Buffett’s annual letters to shareholders. Warren Buffett made his entire fortune investing, and has lots of very useful advice for real people who want to invest. Warren Buffet has provided these to read online free The Secret Code of the Superior Investor, by James K Glassman. This is an excellent treatise on the importance of buy and hold. Wikinvest.com is a great place to find information on companies and...