Sort Your Shit Out: Learn About Share Investing

Having your money make money for you is one of the biggest leg-ups in life. Imagine, putting twenty bucks under a rock and in a year’s time going back to find twenty-two bucks. Wow.

Well, maybe that example’s a little underwhelming, but you get the gist.

While you get on with learning and earning, your savings can be making money on the side. And over time, those bucks will build on each other until you have what’s called a small fortune.

Unfortunately, there are no actual magic rocks, but there are investments that perform a similar miracle. To find them, though, you need to know what to look for.

Here’s where to start.

  1. Find someone who knows where the magic rocks are.

And follow this person around the internet.

There are lots of sharp investors sharing their wisdom online, so try to learn from them. Find one that you respect, has a good reputation and a solid track record.

I like the way Marcus Padley, Adam Carr and the guys at the Motley Fool go about it, but that’s a personal preference for loose lingo and level headed, long term investing. If you’re after something a bit straighter, check out Steve Bartholomeusz and the guys at Business Spectator, or any other market observer that resonates with your reading preferences.

Whoever you choose to follow, run a background check to ensure they’re not shonks and get on their newsletter list.

  1. Don’t do anything silly.

As soon as you’ve read a few blogs, you’ll want to dive in and taste the sweet success of rocketing stocks right away. But don’t.

I say this for two reasons. One, you’ll probably get it wrong and the whole experience will be soured. And two, as soon as you buy, that itch to get a piece of the action quickly turns into a nervous tick worrying about what the share price is doing.

So hold off, for a few months at least. Watch stocks, read blogs and peruse the financial press, but don’t dive in the pool just yet.

  1. Now do something smart.

While you’re biting your nails on the bench, you need to learn to do your own research. Pick up guides from your bank and favourite finance bloggers, and do the video courses on trading platforms like Commsec and NABTrade.

These provide a great base to get your head around the numbers and don’t cost a cent.

A lot of subscription investment services give guides out when you sign up to their entry level – and what should be free – service or newsletter. Gobble this stuff up. Read it all and ask for more.

You’ll learn about danger signs to watch out for – financial measures, as well as things like wonky management teams – and the good bits to look for too.

The more widely you read, the more likely you are to question things people say, and this is one of the most important skills in investing. Never take anything on face value.

  1. And only now, think about having a go.

If, by now, you can hold an intelligent conversation about a company, its prospects and the risks it faces, it’s probably time to take things up a notch.

Now, I can’t tell you this is definitely when you’re ready to pluck a wad of cash out of your wallet and buy shares in a business you like, but that’s what I did. It was a shocking little company that made me some money and then lost me more. Not an ideal start.

But owning a few shares or an index fund is a terrific learning experience that’s hard to replicate. So, if you’ve got some money you’re prepared to lose, this is an option for furthering your education, as long as you do the research beforehand and learn along the way.

A smarter move is to see if the investment gurus you follow have a subscription advisory service. This way, for a couple of hundred bucks a year, you can get recommendations and follow your investments alongside the advisers’ updates. This is what I did after my false start, and learnt a shed-load.

From here, it’s on to expanding your education base and growing that share portfolio, while ensuring you never get yourself into a position where you’re forced to sell.

Then come back every few months for a peek under your magic rock.

Image: Francois de Halleux, via Flickr