Got yourself a few thousand hidden under your mattress that you’d like to invest in the stock market? Well lucky you for landing on my blog because I’ve got the best advice on how to make stacks of money in stocks.
Here it is: Buy what’s going Up and Sell what’s Going Down. BRILLIANT!
Ok, ok. I know you wanted something a little more practical and hand holdy. Well I guess if you are going to twist my arm then I’m going to have to spill a few more details then, huh.
Fair enough then.
Let’s start at the very beginning. *cue prequel music*
Learn About Investing FIRST.
So there are basically three main ways to invest in stocks right. Buying stocks direct (investing in individual companies – which is what I’m mainly all about), buying index funds (so you get to diversify without having to choose the stocks yourself), and mutual funds (so other big guys in suits pick your stocks for you).
There are pro’s and con’s of each, but I truly believe that no matter what method you want to jump into – you need to get yourself educated about the market first.
Yeah I know that sounds BOOOOR-ING but there are only a few different fundamentals that you really need to understand. And you don’t have to wear a red tie – that’s completely optional.
If you are a control freak like me and want to choose your own stocks then obviously you’ll need to know more if you are going to hand over your money to someone else and let them do it for you.
I just don’t like the idea of letting others make decisions for me. I think it stems back to when my ex boyfriend tried to tell me which friends I could continue to see. Loser.
Plus I never what to be a victim of a Ponzi scheme because I don’t want anyone dicking around with my money and scamming me. Besides it sounds too much like some freakish disease that forces you to wear leather jackets, ride a motorcycle and say ‘ay’ all the time. [Did I just show my age? Look up ‘Happy Days’ youngsters who think I’m weird. Sigh.]
Get a Cool Stock Picking Strategy Happening
If you want to invest in stocks directly then you are going to need a stock-picking strategy. There are hundreds of different strategies around so you should choose something that suits your style. Stock Investing for Dummies by Paul Mladjenovic is a pretty good book if you want the basics and some ideas to start but it’s a looong read. You’ll need tons of patience to get past the first chapter. But it is good.
I have ADD (doesn’t everyone these days) so I like short books that just tell me what to do step by step. That’s why I write short books – small attention span.
My strategy is pretty simple. Choose the big boys of the market. Make sure their ROE is over 15%, they have positive earnings growth, low debt to equity ratio’s and a proven history of providing a good return for investors.
Simple but effective.
By applying those rules you effectively cut out about 85% of the market and are left with the top 15% of companies to choose from. You know the good ones that are likely to make you money.
Making it easy. I like easy. No that doesn’t mean that I AM easy.
You’ll Need an Online Brokerage Account.
To place your buy and sell orders you’ll need a brokerage account. The online ones are the best because you’ll be able to link it up to your savings account (or set up a new investment account depending on which company you go with) and get investing straight away.
Unfortunately that means that you won’t be able to yell Buy or Sell down the phone or tell your friends at lunch to hold on a sec while you just ring your stockbroker. But it does mean that you can do all your research and place your orders really easily with the click of a button.
And I already mentioned that I like easy right? No, don’t go there; I know what you’re thinking.
And that’s it really. That’s all you need.
- Money. Check
- Online Brokerage Account. Check
- Stock Picking Plan. Check
Now it’s time to rock and roll and make some sweet sweet moola!
Bring it on.