How To Invest In The Stock Market For Beginners

I've been advocating that you take control of your stock market investing from your broker for a while now, but lately I've been getting questions from my readers about strategies specifically on how to invest in the stock market for beginners. Beginners are easy targets for scams because it's easy to want to make money fast in the stock market. The typical scams are from the penny stocks angle as these are cheaper stocks and therefore more affordable to the beginner.

I guess if I was new to investing in the market and wanted some advice on where to begin, I think the first thing that I would do is study the basics of the stock market and investing. A good book that covers that is The Neatest Little Guide to Stock Market Investing by Jason Kelly. This book provides a good base of knowledge if you are new. One of the nicest features of the book is that he spends some time covering the "masters" of investing in the stock market. You'd be in good shape if you studied each of the masters. According to Kelly, they are Benjamin Graham, Phillip Fisher, Warren Buffett, Peter Lynch, William O'Neil and Bill Miller. Each master focuses on a different investing strategy.

What you'll want to do when you first start investing is adopt a strategy or investing style. By adopting a strategy of one of the previous stock market investing gurus, you've already shortened your learning curve. Just do what they tell you to do. It seems simple, but it really isn't. It will be easy to shift from one idea to another but this is asking for a direct way to losing in the market.

Once you've identified an investing style that meshes with your personality, I'd next spend time practicing the mechanics of locating stocks, buying stocks and figuring out when to sell the stocks in your portfolio by using a stock simulator. You can find several online and sometimes even with your broker. I know that OptionsXpress has a nice one. You could always use investopedia.com.

After you've got the mechanics down, it's important that you start investing with real cash as soon as possible. The reason is that a simulator can only take you so far. The reason is because it all play money. Beginners can only become experts investing in the market by learning from real life experience. Only by making actual trades will learn what you need to know. Start small, but start getting that experience as soon as possible.