Investing In The Stock Market For Total Beginners

[smokestack]

Could anyone tell me a little bit about if it is possible for someone like me to get into investing in the stock market. Before someone tells me that this is a risky business to get into, i am talking about using disposable income type money, the sort of money a lot of folk would blow on cigarettes, beer and gambling that sort of thing. Please take into account that you are talking to a man who used to push a wheelbarrow around a building site for a living. I really do not have a clue about it , but would love to learn. I am sure that i would be a target for all kinds of companys to ake advantage of, so i need adice on who to trust, do you need an agent that sort of thing.

[Kman]

Could anyone tell me a little bit about if it is possible for someone like me to get into investing in the stock market. 

 

Of course you can 

 

But it's like anything in life, playing guitar for example

 

If you pick up a guitar and practice everyday, you might suck to begin with, but there is no direction to go than getting better, just takes time

 

All you need is the desire to learn and time and there can only be one outcome; positive progress. 

 

When it comes to learning the stock market specifically I have no idea, I know nothing about it   but I actually would like to learn too so will be interested to read the replies. 

[smokestack]

Thanks Kman, yes i am looking forward to  hearing from people who have some experience in this area who are not trying to make money out of me.I have heard about the four asset classes,property(Got one house nearly paid for),PM(7oz of silver and counting)stocks and shares(researching), and business (Not sure about that one, im knocking on abit .But three out of four aint bad, ooh get your guitar out i nearly burst into song, oh no that was two out of three aint bad, well i guess that rules out singing as a money making scheme.

[Kman]

Thanks Kman, yes i am looking forward to  hearing from people who have some experience in this area who are not trying to make money out of me.

 

I wrote a post the other week about what I invest in, might find it interesting, might not 

 

http://thesilverforum.com/topic/761-working-hard-vs-working-smart-investing-your-time-money-into-the-right-things/

[smokestack]

I wrote a post the other week about what I invest in, might find it interesting, might not 

 

http://thesilverforum.com/topic/761-working-hard-vs-working-smart-investing-your-time-money-into-the-right-things/

Im off to check it out, thanks Kman.

[ChrisSilver]

I can't tell you whats right for you, but I can tell you a little about my experience.

Firstly I just want to point out that trading and investing in the financial markets are different. Trading tends to be short term positions based on technical analysis, and investing tends to be longer term positions based on fundamentals of a business.

 

I started to try to learn how to trade the financial markets maybe about 5 years ago or so (maybe a few years longer.) Trading the financial markets seemed to be a good way to earn money and to live a life of financial freedom, if I became successful. I read several books (more like huge reference books) about trading, technical analysis, chart patterns, phycology of trading etc (I will link a few of them below). I became an avid listener of a day trading radio show in america www.daytradingradio.com

I quickly realised that to become successful at this you need to dedicate your life. You can not just follow chart patterns and trade successful off of those, because if it was that simple everyone would be doing it. You need to take into account the underlying market conditions, news reports that will be coming out, earning reports, several different time frames of the stock or commodity you are trading, prices of companies and industries that are effect the company / commodity your trading  etc etc. There is a lot to monitor all at the same time.

I was trading spread bets, they are a bit similar to CFD's (contracts for difference) but winnings are tax free as it is classes as gambling. Be warned that this is a highly leveraged product and you can loose more than your account balance quite easily. You need to have a good understanding how spread betting works, and not over leverage yourself. Risking a maximum of around 1% on any given trade.

 

I had very limited success, I could not make a consistent income and eventually I made a large loss clearing out the majority of my trading fund. I have now made an active decision not to trade (though about a month ago I made a one off small trade on silver as a lot of indicators were lining up, and I saw it as a low risk opportunity. closed out my position for just over £800 profit. If I kept the trade open to recently it would have reached my profit target and I would have made over £5000)

I don't trade anymore as I realise that I do not have enough skills to be successful at this, it would require me to devote everything to being a successful trader, and that would mean I would actually have less freedom, not more that I set out for. It is also too risky for me. I also do not invest in companies that trade on the stock exchanges, as I also see these companies prices as heavily manipulated and high risk. Start ups seem like a lot lower risk way to invest in companies to me. And a lot more room for upward potential. There are sites like seedrs (https://www.seedrs.com) and crowdcube (http://www.crowdcube.com) however, I am currently only investing in my own business.

My strategy now consists of investing in my own business, investing a small amount of disposable income into precious metals and investing in property in the future. I see myself as keeping these 3 as my sole investments as I have more knowledge of these investments and for me they are low risk.  

You may learn how to trade and become extremely successful at it, and there is no reason why this can not be a possibility. But it will be a lot of hard work, dedication and a healthy appetite and understanding of risk.

I hope this info was of some use to you.

Recommend books:

Encyclopaedia of chart patterns: http://www.amazon.co.uk/Encyclopedia-Chart-Patterns-Edition-Trading/dp/0471668265/ref=sr_1_sc_1?ie=UTF8&qid=1404663435&sr=8-1-spell&keywords=encyclopaedia+of+chart+paterns great reference book

Technical analysis explained: http://www.amazon.co.uk/Technical-Analysis-Explained-Fifth-Edition/dp/0071825177/ref=sr_1_5?ie=UTF8&qid=1404663471&sr=8-5&keywords=technical+analysis

[smokestack]

Wow Chris, thank you so very much for taking the time to put together such a well thought out and informative reply. After reading your reply i have to say that i will now be thinking very carefully about if it might just be better to put any spare cash into PM. I am not one for taking big risks in life, i do prefer to play things safe most of the time, so thank you once again , i think you might have helped me more than you realize, take care my freind.

[Ares]

Investing in a tracker fund is something i've been looking at doing, it's a fund which pretty much follows whatever index it's tracking does (like FTSE 100), I don't really know a whole lot about it because i've just started looking, but it seems like a good idea because even in the brief period - relatively - from 2008 to 2014 the FTSE has dropped to historic lows and recovered and breaking historic highs. Even from the data from its inception, taking into account all of the rises and falls it works out at something like +6% average year on year.

 

It's probably going to be my first destination for financial market investment, but I need to get the foundations of my life set up first like a house, job & car when I finish university.

[smokestack]

Thank you Ares,even though you say you dont know much about it, you are obviously much more informed than me. I am starting to think that this sort of thing is beyond me because i have no idea what all these terms like FTSE and tracker funds mean. I think you are very lucky if you have had the oppertunity to have a university education because i come from a background where as soon as i left school i had to find work to survive, so i never had the chance of that kind of education(wish i had though). So good luck with your investing , and keep us up to date with how things are going, but i am not sure it is for me after what Chris has told me.

[Cointreau]

I've had five dusters and no gushers. I did have a great oil stock that would have made me a lot of money (Dana Petroleum) but had to sell

before they hit paydirt. I've recently had two energytech companies run out of money, Wasabi energy and Powerhouse Energy, still holding my shares in

AFC Energy (backed by Roman Abramovic), progress there has been a bit glacial. I haven't done that well, but if I had just taken my profit opportunities

then my portfolio would be worth three or four times more than it currently is.

My advice though is get yourself registered with a stockbroker but stay out of the markets until there has been a crash.

 

Chris silver, I haven't done any spread bets for a few months now, but tonight I think I might go £5 a point long gold with a very loose stop.

Why? Because it looks like the bullion banks are on the long side now.

[smokestack]

I've had five dusters and no gushers. I did have a great oil stock that would have made me a lot of money (Dana Petroleum) but had to sell

before they hit paydirt. I've recently had two energytech companies run out of money, Wasabi energy and Powerhouse Energy, still holding my shares in

AFC Energy (backed by Roman Abramovic), progress there has been a bit glacial. I haven't done that well, but if I had just taken my profit opportunities

then my portfolio would be worth three or four times more than it currently is.

My advice though is get yourself registered with a stockbroker but stay out of the markets until there has been a crash.

 

Chris silver, I haven't done any spread bets for a few months now, but tonight I think I might go £5 a point long gold with a very loose stoCoint

Cointreau, is there a google translater for this so i can understand what is going on here, i cannot deny i am feeling a bit like i dont belong round here with all these highly educated people.

[ArthGoch]

Investing in a tracker fund is something i've been looking at doing, it's a fund which pretty much follows whatever index it's tracking does (like FTSE 100), I don't really know a whole lot about it because i've just started looking, but it seems like a good idea because even in the brief period - relatively - from 2008 to 2014 the FTSE has dropped to historic lows and recovered and breaking historic highs. Even from the data from its inception, taking into account all of the rises and falls it works out at something like +6% average year on year.

 

It's probably going to be my first destination for financial market investment, but I need to get the foundations of my life set up first like a house, job & car when I finish university.

 

I would recommend that anyone putting their toe in the water in regards to the stock market first of all looks at the tracker/benchmark funds..

 

The issue with these funds ( and funds in general ) is the management charges or the TER ( total expense ratio) that is levied. Historically a charge on money invested by the client could have a TER in excess of 5%. For every 100 pound put in by the client only 95 was being invested. Thus if headlines showed an average growth of 6% you were in real terms only up 1% 

 

Recent legislation means that fund manager and brokers need to be more transparent in these charges and in all fairness the TERs have dramatically reduced. Don't look for the stellar headline numbers but look at the charges that are being made against funds. Virgin Money was recently lambasted for having one of the highest TER charges for its FTSE tracker although Branston et al gave the impression that they were the publics champion.

 

I would not recommend any funds to anyone, but from personal experience I find the US based Vanguard Funds extremely good value. Base on a semi mutual basis they are committed to keeping cost down, Closer to home  ( but not a tracker) Fundsmith is run by the financial maverick Terry Smith. He owns approximately 70% of the funds units, and with such a commitment you can be certain he is looking to keep costs down 

[Cointreau]

OK, a duster is when an oil company drills an oil prospect and finds jack all. Gusher then is self explanatory.

AFC energy spiked up to 80p about 3-4 years ago and I could have sold then and taken a big 50k profit. They are now about 23p.

And don't even think about spread betting. Too easy to lose money.

Just stack physical pms.

[ChrisSilver]

I just want to add that investing in funds is very risky. Clients put up their money for the fund to trade with, if the fund is successful then the fund takes huge percentage fees. If the fund looses, well its not their money they loose so they are fine. 

 

Obviously if a fund makes a long series of repeated losses then it's clients will withdraw all of the capital. So they want to stay in the game for as long as possible and to be as profitable as possible. But funds are gambling with clients money on a one way bet. If the fund losses the client pays, if the fund wins the win big.

 

There are a lot of private funds with the owner of the fund having a large position of his money in he fund and therefore will hopefully be better managed but I still think funds are very risky.

Tracker funds tend to just follow a specific index, an index is a group of stocks. For example the FTSE 100 is a list of the largest 100 stocks by market capitalisation (size) A FTSE tracker fund will generally just have a weighted position in each of the companies that are in the FTSE, or they will simply have a position in an index itself, this can be achieved through buying futures (a contract to deal at a certain price at a later date.) 

@smokestack All this information might seem extremely overwhelming, so apologies. You might find some useful basic info about spread betting here: http://www.ig.com/uk/introduction-to-spread-betting

[smokestack]

OK, a duster is when an oil company drills an oil prospect and finds jack all. Gusher then is self explanatory.

AFC energy spiked up to 80p about 3-4 years ago and I could have sold then and taken a big 50k profit. They are now about 23p.

StoCoint should have read stop point. Not going to explain that as you need to stay away from spread betting.

Thank you for that Cointreau, i will definitely be staying away from any of this, it wont be very hard to stay away from since i dont know wha it is anyway

[smokestack]

I just want to add that investing in funds is very risky. Clients put up their money for the fund to trade with, if the fund is successful then the fund takes huge percentage fees. If the fund looses, well its not their money they loose so they are fine. 

 

Obviously if a fund makes a long series of repeated losses then it's clients will withdraw all of the capital. So they want to stay in the game for as long as possible and to be as profitable as possible. But funds are gambling with clients money on a one way bet. If the fund losses the client pays, if the fund wins the win big.

 

There are a lot of private funds with the owner of the fund having a large position of his money in he fund and therefore will hopefully be better managed but I still think funds are very risky.

@smokestack You might find some useful basic info about spread betting here: http://www.ig.com/uk/introduction-to-spread-betting

Thank you Chris, but i really think i have had my eyes opened, and this type of investing is not for people like me, but it is still nice to learn something new. As i have already said i feel that i have been helped a lot by your kind words.

[ChrisSilver]

Thank you Chris, but i really think i have had my eyes opened, and this type of investing is not for people like me, but it is still nice to learn something new. As i have already said i feel that i have been helped a lot by your kind words.

 

Yea, like I said before I find trading/investing in the stock market to be very high risk, at least for me. And if your not careful it can be very easy to loose a lot of money. With precious metals the only risk you have is that silver/gold will be worth less when you come to sell. But at least you will always have a nice coin/bar to look at

[HawkHybrid]

a sensible advice I hear on the net is to pay off as much debt as possible(mortgage). whilst

investments on average can possibly make you better returns than interest, it's highly

unlikely to do so, especially when you're starting out. the stock market is high at the moment

historically speaking so is a bad time to buy shares in most companies. it's a good time to

take time to do more research and come up with a plausible strategy. patience and waiting for

your opportunity is very important if you want to make money. the risk of a big drop in share

prices across the board is too high right now so either you bet that it goes down or hold on

and don't bet at all until the odds turn to favour your bets. waiting can take months or years.

there's no reliable quick money strategy unless you plan to rob others of their money. even after

making a well timed investment it will take time for the fruits of your investment to materialize,

even the best companies take time to make money so that they can provide people who own

their shares a return for holding their shares.

 

opportunities come and go, there is no need to rush. a quick decision is an unsafe one.

 

HH 

[garthy]

It's sounds like you've been put off already, there's a lot of jargon involved with the stock market but it's really not as difficult as it seems, you just have to take an interest in what's happening, it's all about speculation.

 

If your still interested here's a risk free stocks and shares account, it's a practice account, they give you £15,000 to mess about with, obviously it's just pretend money but it's a fun way to start to see if you can make money, I'd say invest in what you know, if you work on a building site I'm sure you know whose won all the big contracts, if silver goes through the roof look for a silver mine, if there's a recession invest in the pound shop, some people seem to have a knack it's definitely not about how intelligent you are.

 

https://www.share.com/accounts/other-accounts/practice-account/account-overview/

[Ares]

Utilities shares are a solid thing too although they're very much long haul. There will always be a need for utilities and demand will only increase as will the price if we're talking long haul so pick a big provider and invest because they're very unlikely to go under.

Same with supermarkets I suppose, the bigger players like Tesco and Sainsbury's, they're probably still going to be around in 20+ years IMO.

I'd always been fond with the idea of investing in the financial market but I'm very much a novice at it.

[HelpingHands]

I've watched plenty of Greg Mannarino's video but have never used his free site 'traders choice'.  Has anybody here given his picks a go?

[HawkHybrid]

his choice are american stocks, we should be choosing british listed stocks to

make use of our advantage.

 

HH

[Pipers]

I've said it a couple of times now money weekly have a very good weekly email 'investing for beginners' It lasts about 12 weeks and if at the end of that you still want to invest then go ahead.

 

As a general point you will not beat the traders day in day out that is there job, but they have targets to meet, so have to invest when you don't. you can pick and choose if and when to trade, this gives you a big advantage.  Invest when markets are low taking your stake out as stock rises. Then start taking profits never being to greedy.

 

Another method is cockroach investing where you take no notice of the markets put 25/25/25/25 in each sector looking for best value (we would say Silver/Gold in commodities).  This method year upon year beats active funds.  Do a search for it online.

[FTYBR]

Thought I'd wade in with my 2 oz worth

There are many helpful/selfless people willing to guide their fellow man/woman across the minefield that is the stock market. But bear in mind all will have had different experiences, different levels of funding (££!), different objectives and different tolerances to risk (up and down).

I guarantee that the most experienced, intelligent investors/traders you'll ever meet/read about have all...without exception, had to lose significant amounts of money (currency of their own or someone else's.. to get where they are.

Now to contradict myself completely, I'm going to offer some helpful advice!

1. Avoid spread betting/CFD's completely - it's a mugs game for the get rick quick generation.

2. Read no. 1 again

3. Stick to what you know and understand (PM's?!?)

4. If you're buying PM's as you believe our economic/monetary system is heading for a systemic crash (for any one of a dozen reasons), then bear in mind that all stocks/bonds are likely to tumble in the short term during any such event. The avalanche will take with it all market sectors and whilst the aftermath may prove very rewarding for those holding the right stocks (water/agriculture/infrastructure/mining/oil etc) - will you have been able to hold your nerve? Would you have needed the money at some point and forced to sell?

5. If the above makes no sense to you, sorry to scare you! Keep buying PM's

6. Gold/silver mining companies are certainly interesting but there are so many out there large and small, all facing potential pitfalls with funding, debt, loss of licence etc. so if analysing all this gives you a headache - stick to PM's (that you can fondle)

7. Sites/personalities online giving tips about certain companies - personally I'd ignore them. The stockmarket is a casino now, fundamental analysis has pretty much gone out the window. Check out CYNK in the US for an example of madness.

Brucey bonus 8. Remember that the price of the physical metals is still determined by the paper instrument. Take advantage of this while it lasts. Eventually I believe there will be a separation of the two. When that happens - we should all be doing quite nicely.

Good luck whatever you decide to do anyway!

And follow the yellow brick road

[smokestack]

Thank you FTYBR but there is no doubt now in my mind that i will be sticking to PMs   ,the stock market is way too risky for someone like me. In my younger days i used to have a flutter on the horses, in the end i had to give it up because every time i lost(which was often) i was completely devastated and overcome with a sense of loss. Needless to stay i no longer bet on the horses. I do not think there is anything wrong with a little gamble here and there as long as you dont mind losing and can just treat it as entertainment. Sadly(or maybe happily) i am not one of those type of people.