Every week I get people asking me what they need to do to get started investing. I wanted to create a quick three step process that I think should help you get started and see some success investing.
Create a starter fund
In order to participate in capitalism you have to have some capital. The real question is about how much should you have before you start. In my personal opinion you have to have at least $1,000. Some people say $100,000 (Grant Cardone) and some are trying to invest with $100. I think that a good number is $1,000. You wont get rich investing a grand but it provides a good base to start contributing on top of and it also gives you enough money to not be priced out of higher priced but quality stocks like Amazon and Google. Most people will never reach $100k so that goal could price you out. $100 is ridiculous because even if you hit it out the park with a 20% gain it will yield $20 which will get eaten up with the comission both in and out ($7 both ways) and leave you with a six dollar gain. Thats an uber ride. Aim for $1,000.
Once you get that starter fund, and this is important, you have to continue to contribute to that fund. Like Grant Cardone says, “success is like maintaining a garden” you cant just set it and forget about it. You have to continue to add wood to the fire that is your investment account. There are a lot of ways to get that account going even if you have a modest working income. I address this in my prior blog post “how can I afford to invest”. Check that out and if you have any questions feel free to email us.
Immerse yourself in the market
Next, you have to become obsessed with the stock market. This is if you really want to make money. If you want to casually set it and forget it then you can settle for merely looking at the market and investing in index funds. Or, you can hire someone who is obsessed with the market. The key is that you have to know what you are doing and the only way to know what you are doing is that you have to be reading, watching, talking and listening to things that are market related. We all know that education is key so get your market education so you can be a good investor.
I always recommend watching CNBC. I think you should watch it even if you have no idea what they are talking about. Watch it until you get it. You will start seeing patterns and recognizing terms and pretty soon you will be able to count on it as a source of information. You should also be reading investment related books. You can start with Investing for Dummies and then progress to more sophisticated books like the ones we post here.
Lastly, you can read articles online that are attached to companies on google finance and listen to podcasts. Podcasts are a great source of education because a lot of the time you get to hear unbiased, unfiltered truth that hasn’t been watered down by mass media. I recommend that you download the stitcher app which is a library of podcasts. Some of my favorites are Jim Cramer Mad Money one, motley fool or any Wall Street Journal or Forbes owned ones. Just search stock market and they should come up.
Its not enough to buy the stock you have to continuously learn about the company you own and the market in general. Like Cramer always says “the game is buy and HOMEWORK not buy and HOLD”. This requires that you read company’s financial reports, read the conference calls, read articles related to the company on Google Finance and any other source of information. Its not enough to get enough knowledge that you can get started. You have to then level up your education. In fact, you have to know so much that you know more than everyone else, before they know it.
Warren Buffet and Charlie Munger aren’t successful because they are naturally smart. They are smart because they are always reading and learning. Buffet himself says he reads at least 6 hours a day. Therefore, its important that you understand stock market investing is a business and a profession. Anything less than complete obsession will yield average results.
If you are interested in getting started investing we have a club that is incorporating all of these aspects into one massive fund of pooled investment dollars. I want you to join us on our next conference call January 16, 2017. Email firstname.lastname@example.org so we can put you on our mailing list and make sure you are on the next call!