Investing In to the Stock Market

[ProjectRED]

Hello, LTT!

 

So just recently ive come up on the stock market. I am 19 years, old on the way to 20 in a month, and I would like to know how this all works. I have watched hours and hours of YouTube videos on how to start investing/trading but they are either very vague or trying to make me buy there services. Does anyone know the trick to start or at least have some idea on who is trusted and some tips to get going.

 

Thanks!

[Blade of Grass]

Both r/personalfinance and r/investing have vast amounts of detailed information available to help you get started investing. Personally, I would look at PF first (to decide if investing really fits into your current financial plan), then go to investing--if you decide it does--and learn from there. 

[SpaceGhostC2C]

5 hours ago, ProjectRED said:

Hello, LTT!

 

So just recently ive come up on the stock market. I am 19 years, old on the way to 20 in a month, and I would like to know how this all works. I have watched hours and hours of YouTube videos on how to start investing/trading but they are either very vague or trying to make me buy there services. Does anyone know the trick to start or at least have some idea on who is trusted and some tips to get going.

 

Thanks!

The basics:

 

1) You always invest through an intermediary (your bank, a broker, etc). Never, never overlook fees and commissions. Only net returns matter (net of fees and commissions).

2) Expected return goes hand in hand with risk. Whatever you read, whichever guru you find explaining how to outsmart the market, there's just no such thing. Every success story along the lines of "I made 50% in 6 months" is the story of a successful gamble.

3) Related to (2): short-run gains are mostly random. Long-run gains is why investing makes sense. You are young: it makes sense for you to enter the market. Historically, the stock market delivers a hard to explain premium over safe assets at 10, 20, 30 years horizon. Two years from now, however, you could be on red numbers. Invest money you won't need for a long while.

4) The market pays off in the long run. Stock-picking, on the other hand, is gambling (there is substantial evidence about this). Remember (1): trading involves fees and commissions that eat from your returns. There's also evidence that active traders (selling and buying individual stocks at high frequencies) obtain worse net returns than passive investors (they sometimes obtain higher returns... until you deduct transaction costs). In other words, stock-picking is like sport bets: it's OK to do it for fun and you may even get lucky; as a way to make money, it's a terrible idea. Meaning: you are probably better off buying ETFs than individual stocks. Individual companies may even go bankrupt, but the market itself grows along a mild positive trend.