Iām new to actually investing, I just know a bit of terminology.
What kind of investments should I look into first?
This blog might help
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Very informative, thanks!
Though, that post doesnāt actually tell me how to be a great stock investor, just how to be a sensible investorā¦
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Weāve got lots more blog posts where that came from 
Thereās a few more in this wiki that you might find useful Introductory wiki š£
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Best of luck on the investing journey Ben!
Perhaps the point is that āsensible investingā is something that can be taught, and it has fairly predictable results. Invest enough for a long time in diversified low cost assets, and youāll probably do well.
But āgreat investingā, if you mean something that results in better returns or does it quicker, is both harder to teach and has bad as well as good outcomes because the results are unpredictable. āAllā you have to do is pick investments that will do better and avoid ones that wonāt - the challenge is that that is very hard to do. As Raul says, Buffett can do this. But maybe most investors canāt!
Anyway, I started my investment jouney by reading Tim Haleās Smarter Investing.
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I would recommend this book too.
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My conclusion after reading that and a lot of other books and blogs was:
- for various reasons itās hard to have an investment āedgeā on the rest of the market participants. (And probably much harder than your intuition tells youā¦ after all youāre a clever person right). So investing by picking stocks or picking investment advisors might not be as successful as you hope, net of costs.
- luckily there is a way to all but guarantee a good investment outcome, though the problem is that itās a very boring way to invest:
low cost index-tracking. More: Checksies ā
Ā #1: personal pensions
Thatās pretty much what works for me.
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I would go further and say that, on a long enough time line, no investor can. The successful ones are just experiencing a string of good luck. If you had enough monkeys making random stock picks, one of them would be as successful as the most successful retail investor.
You canāt become as good as Buffet, because Buffet isnāt just picking stocks like you or I can. He has enough money to buy up controlling interests in companies, to make them succeed. His reputation alone means others will invest in those companies as well, raising the price. You canāt do this. Buffet probably made most of his own money initially not by picking good stocks, but by taking the money of other people to pick stocks for them. You also canāt do this.
Another good book to read is āA random walk down Wall Streetā. It shows how you canāt predict the future of the market from past behaviour (it acts, for practical purposes, randomly - donāt spend time looking at graphs!), and picking good stocks consistently is for practical purposes impossible, because no one can predict the future. Your best bet is to invest in everything (a world index).
To get back to @BenTen1010ās question, you can:
- Invest sensibly, and pick an index
- Gamble on something, and luckily come out ahead of the market
- Gamble on something, and unluckily come out behind the market.
3 is much more likely than 2. And 2 doesnāt make you a āgreatā stock investor. Just a lucky gambler.
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As a first investment an index fund is usually a good shout.
But I would say do some general reading/research into investing. Donāt rush anything, and donāt invest in anything you donāt understand - the stock market will be there tomorrow and the day after!
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If looking to invest in companiesā¦
Look around your Kitchen, Bathroom or your Medicine cabinet. Look at the labels. Find out who the manufacturers are. Review their Income, Balance Sheet and Cash Flow statements. Are their dividends growing year on year?
Invest in what you know initially and learn.
Some examples:
Reckitt Benckiser - Durex, Neurofen, Dettol, Gaviscon
Unilever - Dove, Knorr, Rexona, Persil
Procter and Gamble - Head and Shoulders, Ariel, Downy, Tide
Heinz - Ketchup
PZ Cussons - Imperial Leather
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Donāt think itās necessary to go through the financial reports if youāre new to investing, seems like that would put lots of people off. ETFs are a great way to start and then build of your knowledge if you want. Same with trusts.
Doesnāt need to be that complicated unless youāre investing large sums of money or want to casually drop terms like āmarket capitalisationā into conversations to impress your mates
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An infrequently-discussed benefit of this investing philosophy is that you stop worrying about your investments (because youāre happy to accept the marketās return) and you stop spending time and effort trying to predict the stock market (because you believe itās random and opaque to you). Which frees up time for other things.
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