In this lesson you Darren winters will teach you what stock market investing really entails as opposed to common myths you may have heard.
What Darren thinks You Need to Know Before Beginning
Welcome to the world of investing in the stock market. You are about to join the ranks of a very elite group of people, namely those who have decided to actively manage their own money and make it work for them. This is a big step, and not one that should be taken without sufficient preparation. Before beginning with the more technical aspects of investing in the stock market, then, you should first ensure you have dealt with any mitigating circumstances that might otherwise distract you.
A Darren Winters Tip
Many outside factors, such as lack of cash and preexisting fears, may affect your investment abilities and decisions. Learn about your fears before attempting to invest.
The most obvious confounding circumstance would be lack of cash with which to invest. The effects of this situation would probably be limited, however, to a lack of opportunity for profit. Also significant would be a lack of understanding of how stocks compare with other investments. That is explained here sufficiently to neutralize that fear.
More insidious, however, are the preexisting fears many people bring with them. These fears can affect investment decisions up to and including the decision whether to invest at all. Here are some common ones:
Fear of technical-ese
Fear that your financial knowledge is insufficient
Fear that investing is only for millionaires
Fear of stock market crashes
Fear that investing in the stock market is a gamble
Fear that investing is too time-consuming
Because these fears have the potential for damage, it’s best to meet them head on. Face your fears of the stock market directly by learning the truths behind erroneous information you may have heard. You will then be able to place any reservations you may have had in their proper perspectives.
The stock market has a language all its own—street talk. Terms like zero-coupon bonds, net asset values, and price/earnings ratios are absolutely guaranteed to draw a blank look from the average person on the street. This shouldn’t be surprising. Every trade, sport, and craft has a certain number of terms or phrases that are unique to it. And, since language is created by need, specific terms have arisen in each sphere to address this need for description.
Darren Winters Tip
To deal with the fear of technical-ese, or the terminology used in the financial community, keep in mind that as a beginning investor your need for learning these terms is limited.
The terminology used in some areas, in sports for example, is familiar to almost everyone. Most people know what a seventh-inning stretch, a free throw, and a touchdown are even if they’ve never played or attended a game in their lives. However, in other areas, such as law and medicine, the terminology seems confusing and technical, leading to the general consensus that much schooling and substantial intellectual ability are required to understand any of it.
Unfortunately, finance—which includes the stock market—has long fallen into that second category. There could be several reasons why. Perhaps one is the fact that much of finance involves math—and we all know how we struggled with that in high school. Perhaps it is because Wall Street’s conservative image makes us uncomfortable and thus we don’t pretend to understand what it’s about and we are hesitant to ask.
Darren Winters Tip
While the sheer number of financial terms might be a little overwhelming, learning them isn’t as daunting a task as it might appear. Many basic terms are used very frequently and will quickly become familiar.