Entering the stock market

Stocks, which are shares of ownership in a company, are an example of an
ownership investment. If you want to share in the growth and profits of companies like Apple, you can! You simply buy shares of their stock through a
brokerage firm. However, even if Apple makes money in the future, you can’t
guarantee that the value of its stock will increase.
Some companies today sell their stock directly to investors, allowing you to
bypass brokers. You can also invest in stocks via a stock mutual fund, where
a fund manager decides which individual stocks to include in the fund.

You don’t need an MBA or a PhD to make money in the stock market. If you
can practice some simple lessons, such as making regular and systematic
investments and investing in proven companies and funds while minimizing
your investment expenses and taxes, you’ll be a winner.
However, I don’t believe you can “beat the markets,” and you certainly can’t
beat the best professional money managers at their own, full-time game. This
book shows you time-proven, nongimmicky methods to make your money
grow in the stock market as well as in other financial markets.

Getting Started with Investing

Before I discuss the major investing alternatives, I
want to start with something that’s quite basic, yet important. What exactly
do I mean when I say “investing”? Simply stated, investing means you have
money put away for future use.

You can choose from tens of thousands of stocks, bonds, mutual funds, and
other investments. Unfortunately for the novice, and even for the experts
who are honest with you, knowing the name of the investment is just the tip
of the iceberg. Underneath each of these investments lurks a veritable mountain of details.
If you wanted to and had the ability to quit your day job, you could make a
full-time endeavor out of analyzing economic trends and financial statements
and talking to business employees, customers, suppliers, and so on. However,
I don’t want to scare you away from investing just because some people do it
on a full-time basis. Making wise investments need not take a lot of your time.
If you know where to get high-quality information, and you purchase wellmanaged investments, you can leave the investment management to the best
experts. Then you can do the work that you’re best at and have more free time
for fun stuff.
An important part of making wise investments is knowing when you have
enough information to do things well on your own and when you should hire
others. For example, investing in foreign stock markets is generally more
difficult to research and understand compared with investing in domestic
markets. Thus, hiring a good money manager, such as through a mutual fund,
makes more sense when investing overseas than going to all the time, trouble, and expense of picking your own individual stocks.
I’m here to give you the information you need to make your way through the
complex investment world. 

Investment Choices

In many parts of the world, life’s basic necessities — food, clothing,
shelter, and taxes — gobble the entirety of people’s meager earnings.
Although some Americans do truly struggle for basic necessities, the bigger
problem for most Americans is that they consider just about everything —
eating out, driving new cars, hopping on airplanes for vacation — to be a
necessity. I’ve taken it upon myself to help you
recognize that investing — that is, putting your money to work for you — is
also a necessity. If you want to accomplish important personal and financial
goals, such as owning a home, starting your own business, helping your kids
through college (and spending more time with them when they’re young),
retiring comfortably, and so on, you must know how to invest well.
It has been said, and too often quoted, that the only certainties in life are
death and taxes. To these two certainties I add one more: being confused by
and ignorant about investing. Because investing is a confounding activity,
you may be tempted to look with envious eyes at those people in the world
who appear to be savvy with money and investing. Remember that everyone
starts with the same level of financial knowledge — none! No one is born
knowing this stuff! The only difference between those who know and those
who don’t is that those who know have devoted their time and energy to
acquiring useful knowledge about the investment world.