My interest in investing started when I was just 10, back then I watched a drama regarding stock broker and the things they are talking about intrigue me. The numbers, the way they try to initiate trades and all the wizard talk make them look so cool.
So I started researching on this subject when I was about 18 which is the legal for anyone to do any form of investing in my country. Now I manage my own portfolio with an not so impressive 4% per annum return and I am striving to learn more in this field to increase my return rate.
My journey as a investor did not start well as back then there wasn't much reliable information and many lesson were through trial and error. So I decided to compile the steps I take in a more chronological ways to help you get started.
1) Take Economics Class
This is the most fundamental step as most of the investment revolve around our economy. Learning economics can help you understand what is going on in the world economy so you can make a more inform decision.
I recommend studying the following:
- Supply & Demand
- Fiscal Policy vs Monetary Policy
2) Learn The Terms Used in Investing
Learning the terms used in investing allow you to communicate with your broker efficiently and it also allow you to understand what is being spoken in the mainstream media.
Example of terms in investing are as follow:
Bull - Market rising
Bear - Market falling
Blue Chip - Shares of big and reputable companies
Initial Public Offering (IPO) - New shares issue from previously private company
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3) Look at Different Type of Investment Vehicle
There are many type of investment vehicle each carrying different risk and reward. Depending on your personal risk tolerance, you might want to look at investment that is suitable for you.
Types of investment vehicle:
- Stocks
- Mutual Funds/Unit Trust
- Bonds
- Forex
- Precious Metal
- Real Estate
4) Find a Reputable Broker
After deciding on which investment vehicle is more suitable for you, it is time to find a broker. There are many broker flooding the market, it is imperative that you find a reputable one who specialize in the field of your chosen investment vehicle which will provide reliable information and good customer support. Sign up for demo account if possible to test their platform and google reviews about the broker before committing to that broker.
5) Learn About The Different Analysis Type
There are essentially 2 type of analysis:
Fundamental analysis - The study of economy, industry sector and companies to predict price movement. This is where learning about economics come in handy. It basically means reading news and annual report to make informed decision on your investment.
Technical analysis - Making informed decision through the study of past market data like price and volumes.
I find that the easiest way to learn about this 2 type of analysis is to through Forex trading. You can create a free demo account from any broker and play around with different analysis. This way you can safe guard your money while learning a valuable lesson.
Knowing all this basics should allow you to kick start your investment journey. However, no investment is 100% so it is very important that you do your due diligence and invest only with money you can spare.
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