Sub topic: Start By Aiming For Long Term Returns
Starting out knowing nothing and learning on one's own or from friends for many is beneficial. My first encounter to investing, rather than trading, was explained to me calmly by a coworker reading through the Wall Street Journal. I immediately was in positive verb mode when the coworker engaged me with key questions and ideas I could easily comprehend. I was focused, attentive, eager, and newly happily ready to enact a plan for my future!
You like your current lifestyle and even want more/better for yourself;
- Make more money
- Nicer or new styled clothing
- Go out with friends
What are some of the things you like to do?
- eat well
- furnish/design your home
- buy tech gadgets
The best part of making money in stocks (proven to be the most reliable way to make money over a century) is making it without working hard and even as you sleep! (I did say "Oh Yeah, I likeTHAT idea! " to the making money while sleeping!). My coworker was crystal clear and spoke calmly when he pointed out that at any time one decides to retire (from being a worker - not winning lotto, luckily finding yourself rich from some venture, or marrying into money... at least not yet) you will no longer have income and will have to live off savings you hopefully have guarded. He eloquently demonstrated how difficult it might be to actually have money upon retirement if you only relied on your working paycheck.
Investing was the only way to make "extra" money. The coworker used the example of my favorite soft drink, Pepsi (PEP). Investing is essentially believing in a company, like Pepsi, to make a product and expand markets with new factories, hiring more people to help the cause, as well as new trucks to deliver. Sometimes spending for ads or sponsoring community events go a long way in gaining customer loyalty and their buying the product.
The best part came next when it was pointed out to me about dividends and I could get paid while just hanging on to the stock (dividend reinvestment - either receiving a check or having more stock bought) while doing my daily routine of sleeping, eating, watching TV, and working ... etc.
Now to find the key to unlock two doors ... How to decide what to buy, then how to actually buy it! My coworker said, "Look around, investigate the companies, that make the things you buy and take for granted, that are available when you shop." Returning to Pepsi AND Cocoa-Cola (KO) as prime examples, the coworker moved onto the telephone (AT&T symbol: T ) company and Citibank (Citigroup / C ) both companies of which I used at the time. It was reasoned these were long-standing companies that may have gone through some tough times but were not in jeopardy of going out of business!
The next biggest lesson once I understood the basics was having patience. Saving money takes time and the market goes through cycles ... Don't just rely on charts but also understand the market forces and company fundamentals. Most importantly, know where your money is and what it's doing.