How to invest when you know very little about investing?

[tonyf7]

Late last year I starting thinking to myself that the market was due for a correction. It took a decade for my investment property to regain all of its value from the 2008 crash. So I decided to sell the property before another crash. I didn't want to get stuck with it for another decade (or more), plus I didn't want to be a landlord anymore. Glad I sold cuz geez, sh** is really hitting the fan right now.

But now I'm sitting on some cash and I'm not sure what to do with it.

I know for sure I'm loosing money by letting it sit in a bank, so I'd like to put it to work for me. But I know very little about investing. The only thing I'm familiar with is dollar cost averaging in index funds (which I've also never really done aside from contributing to some 401k's back in the day before I became self-employed).

I'd like to self-educate and learn how to invest. Any classes or books out there that can get me started?

Any suggestions for how to invest when you don't know how to? I hate to have my money just sitting there doing nothing, but I also don't want to risk making ignorant decisions, especially in this market.

Thanks for your suggestions and advice.

 

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[Zhyna]

Bond yields are negative at the moment, and with the yield curve becoming inverted that tells you big investors think that there is not a lot of safe places to put your money. Cash is king in a recession. You have said it yourself that you know nothing about investing.... so I think you should research for a couple of months before you decide to do anything drastic.

A 0% return is better then a -30% return. Especially in this market, where every company is looking for a government hand out. Look into government bonds or T bills to see if you could scoop a safe yield on. Although as I stated bond yields aren't great, even some countries bonds are negative, as people would rather lose a certain amount of money, then lose an unforeseen amount of money.

You are in a good position at the moment, don't make irrational decisions just because you hear stocks are cheap as. They are cheap for a reason. Stay safe out there

 

[Tourmaline]

The typical phrase is 'invest in what you know'.

So....what do you know? What industry or market do you keep up with? Work in?

Those are probably where you should be looking to invest.

Otherwise the general advice will be to invest in yourself, to invest your own business, etc.

 

[Kak]

If you want to learn... Start with intelligent investor, but be careful getting in right now.

 

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[Deleted78083]

Yes, the intelligent investor, investment for dummies + google. Have a look at Ray Dalio's principle and "how the economic machine works". Familiarize yourself with the different products that exists (equities, bonds, futures, options etc) and finally, READ THE NEWS. A market is based on information, and new information will move the market. If you are going to invest, you need to know what is up in the world. Pick stocks of industries you know and go see how they have been evolving since the last 20 years. Watch some documentaries about 2008, so you can also understand what could go wrong.

 

[Tossek]

Bond yields are negative at the moment, and with the yield curve becoming inverted

Yeah, but then, is it?
Fact is that the slope has increased and it can be considered as normal right now in sense of US Bonds. The treasuries are quite high for the situation we are in. I guess due to margin calls and uncertainty, investors go into general liquidity and even dropping bonds.

Dropping yields will lead to higher value bonds. In this regard, US Bonds can be a good investment if you think that the bond market will be normalized to a general crisis mode with inverse yield curve. Right now, it is not.

 

[Tossek]

I'd like to self-educate and learn how to invest. Any classes or books out there that can get me started?

Maybe to help the thread starter. I really like the youtube channel "learn to invest". I do not always share his opinion but he is very truthful about his reasoning, puts numbers and facts inside and is super transparent. You can learn there a lot, I guess. Here an example:

View: https://www.youtube.com/watch?v=ZpxAdDHquzk

 

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[Blackout17]

Invest in yourself to learn the markets before you bumble some money into something utterly worthless.

 

[MaxKhalus]

Late last year I starting thinking to myself that the market was due for a correction. It took a decade for my investment property to regain all of its value from the 2008 crash. So I decided to sell the property before another crash. I didn't want to get stuck with it for another decade (or more), plus I didn't want to be a landlord anymore. Glad I sold cuz geez, sh** is really hitting the fan right now.

But now I'm sitting on some cash and I'm not sure what to do with it.

I know for sure I'm loosing money by letting it sit in a bank, so I'd like to put it to work for me. But I know very little about investing. The only thing I'm familiar with is dollar cost averaging in index funds (which I've also never really done aside from contributing to some 401k's back in the day before I became self-employed).

I'd like to self-educate and learn how to invest. Any classes or books out there that can get me started?

Any suggestions for how to invest when you don't know how to? I hate to have my money just sitting there doing nothing, but I also don't want to risk making ignorant decisions, especially in this market.

Thanks for your suggestions and advice.

Learn from the best investor of all time. Perhaps the smartest guy of 2020 (Ray Dalio):

Principles by Ray Dalio

Principles: Life & Work by Ray Dalio now available in hardcover and as an audiobook. Learn more at principles.com

www.principles.com

You'll learn content that goes beyond investing, applying to everything

 

[FierceRacoon]

Here is an example.

Say, you spend a few years and A LOT OF TIME and get a reasonable grasp on investing. To be sure, the majority of professional financial advisors don't outperform the index funds, but let's say you are special and get really good at it in just two years.

Let's say you are willing to put in $20,000 of hard cash .
Let's say you do really really well and get CONSISTENT 30% returns year after year.

Then after 8 years, 1.3**8 == 8.157...
So you've spent 2 years learning and waited for 8 years, risking your $20k, got really lucky, and now you have $163,000 after a decade, or a $143k gain.
But to get that you probably needed at least a 40hr/week effort over those 2 years and, say, 5hr/week over the remaining 8 years. So we are talking, 3 years of full-time work for $143,000 or $47,600 for a year of full-time work, to be received only after a decade, while risking the principal, and only if you also get quite lucky.

Does it make sense? No, it doesn't. Learning more than the basics of investing is simply not a rational choice for the vast majority of people. (The basics are to not become a victim of scammers.)

And can you really manage to do it full-time for the next two years, to get to such a high level? How would you get to such a high level without losing any money?

Let's say you want to put in $200,000, but now you get a little less lucky and get 20% for every year, still after 2 years of full-time learning. Then after 8 years, 1.2**8 = 4.29.
So now your $200k has appreciated to $859k. Now we are talking $219.66k for each year of full-time work.
It does seem like not a bad deal, but most investment advisors are a far cry from getting consistent 20% returns for 8 years straight. And if you assume consistent returns of 10% per year, still quite optimistic, it is 200k becoming 428.7k, or a 76k salary for each year of your full-time investment effort.

Now, remember, you can LOSE your principal.
Let's say, you put in 2 years of learning, and 5h/week for the next 10 years, and you get a -30% loss over the next 10 years. Then 200k will become 140k. So you have lost 60k IN ADDITION to having wasted 3 years of full-time work AND you have locked 140k of your money for a decade while potentially risking it as well.

How about this idea:
- preserve the principal
- take some of the money and invest in yourself. Your own learning.
- if you really love the stock market, do something related to it for the time being such as writing blog articles about it or creating trading apps, and learn while having other potential upsides. Learn while you are becoming a better writer or a better app developer.
Don't listen to this investment hype; stock market is not meant for the general public. Don't believe book authors and trading app developers; they are in an entirely different business.

 

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