NOTE: This post is part of an ongoing education series. This information is for educational purposes only. This information does not constitute investment advice. Please consult with your financial advisor (or Polaris Financial Planning) before taking any action. Last Monday I did a post about Index funds and a reader named Jemand asked some really good questions. Today I am going to address the first part of Jemand's comment.
Alright, so I know I shouldn’t make investment advice on the basis of a blog. But I don’t even know where to start!
Great Comment! Where does one start?
I regularly suggest that people read up on investments. One easy way to do this is to pick up a few copies of a magazine like "Money" or "Kiplinger's". You can just get one or two at a book store or read them for free at your library. The magazines usually have short pieces that are written for the novice reader. Read them and become familiar with the terms and some basics on how the markets work. You will not become an expert over night but after you read a few you will understand some basics which may prevent you from getting ripped off. The one warning I will give is that you do NOT take any of the specific advice given in a magazine. In a single issue you can find a story on buying for the long term and another on the hottest stock over the last 6 months. If you are new - you will have no way to know which ideas are good for you and you can easily start down the wrong path. A few extra months of education should pay big long term dividends.
I always remind people that one of the best ways to make money in the long run is to not lose money in the short run.
The next step if you want to take it - read some good books. I can tell you about one of my favorites. "Common Sense on Mutual Funds" by John C Bogle. This is a classic book and the original version is still full of relevant information (shown on the left). However it has been updated and is even better ("revised" version is on the right). It has a lot of math and statistics so it may scare off some readers but, it is not that bad! It is one of the most important investment books I have ever read.