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I'm completely new to the world of investing and stocks. Knowing that I shouldn't invest or buy stocks until I know it well enough, I was wondering which cheap or affordable resources would be the best to get started?

I've seen quite a lot of books and websites that teach investing, but it's hard to choose. To narrow it down, what book and/or what website would you recommend that does a good job teaching investing in stocks to beginners?

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  • Related non-book questions: money.stackexchange.com/questions/1625 and money.stackexchange.com/questions/2825
    – Chris W. Rea
    Commented Apr 13, 2011 at 13:45
  • Are you interested in investing as in save-for-retirement-and-college type stuff? In that case I'd point to a general basic financial planning book, because all you really have to do is pick an asset allocation, avoid getting ripped off selecting mutual funds to implement it, and set up automatic deposits/rebalance so it's on autopilot. Done. If you're interested instead in investing as a stocks-are-a-fun-hobby, then I'd point to Benjamin Graham and so on. But it really is a hobby, i.e. do it only if you enjoy it, don't expect to make money.
    – Havoc P
    Commented Apr 14, 2011 at 0:45
  • You're right Havoc. I should have pointed out that I meant "investing as a stocks-are-a-fun-hobby". However, why do you say "don't expect to make money"? Are expectations like that wrong? Shouldn't I expect some money, even as a side income?
    – YOMorales
    Commented Apr 14, 2011 at 2:43
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    If you're careful about diversification and don't fall in any behavioral traps (big ifs), you would probably stay somewhere close to market returns (maybe think of it as +/- 20% with both equally likely?) So you aren't that likely to completely lose (as long as you avoid day trading). Most likely I'd say is to do a bit worse than a decent fund, which would likely mean a bit worse than 6-7% annual real returns.
    – Havoc P
    Commented Apr 14, 2011 at 12:26
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    Just keeping track of your returns properly is a whole section of the CFA stuff and sort of hard. I'd guess most people tend to bucket their winning picks in their mind and overestimate success, plus take too much credit for years that go well vs. those that don't.
    – Havoc P
    Commented Apr 14, 2011 at 12:31

5 Answers 5

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The Motley Fool's How to Invest

How To Invest

Benjamin Graham's The Intelligent Investor

The Intelligent Investor

If you like The Intelligent Investor then try Benjamin's Security Analysis. But that one is not a beginner book.

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  • Thanks. I've seen quite a bunch of people recommending the Motley Fool. I will take a glance at your suggestions and decide if they are really what I'm looking for.
    – YOMorales
    Commented Apr 14, 2011 at 2:48
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    My criticism of Motley Fool is that they're having too much fun... I guess that's also what some people like about it. But investing is sort of about avoiding emotional action, so I question the value of their tone. Perhaps you get more analysis and quantitative data for your money at Morningstar, too. In the end I guess a lot of people mess with stocks primarily in order to talk about them (in person or on forums) so Motley Fool may be good for that purpose...
    – Havoc P
    Commented Apr 14, 2011 at 13:37
  • I'm picking this as the answer after giving enough time for more answers. It was answered concisely and the resources are proving to be helpful. @Havoc: Yeah, I've seen what you mean about Motley Fool. But at least their website is helpful for absolute beginners like me. I'll take your resources as backup/advanced options.
    – YOMorales
    Commented Apr 15, 2011 at 21:55
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If you just want to save for retirement, start with a financial planning book, like this one: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 and here's my editorial on the investing part: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/

If you're thinking of spending time stock-picking or trading for fun, then there are lots of options.

Web site:

Morningstar Premium (http://morningstar.com) has very good information. They analyze almost all large-cap stocks and some small caps too, plus mutual funds and ETFs, and have some good general information articles. It doesn't have the sales-pitch hot-blooded tone of most other sites. Morningstar analyzes companies from a value investing point of view which is probably what you want unless you're day trading. Also they analyze funds, which are probably the most practical investment.

Books:

If you want to be competent (in the sense that a professional investor trying to beat the market or control risk vs. the market would be) then I thought the CFA curriculum was pretty good:

However, this will quickly teach you how much is involved in being competent. The level 1 curriculum when I did it was 6 or 7 thick textbooks, equivalent to probably a college semester courseload. I didn't do level 2 or 3. I don't think level 1 was enough to become competent, it's just enough to learn what you don't know. The actual CFA charter requires all three levels and years of work experience.

If you more want to dabble, then Benjamin Graham's The Intelligent Investor certainly isn't a bad place to start, but you'd also want to read some efficient markets stuff (Random Walk Down Wall Street, or something by Bogle, or The Intelligent Asset Allocator http://www.amazon.com/Intelligent-Asset-Allocator-Portfolio-Maximize/dp/0071362363, are some options). It wouldn't be bad to just read a textbook like http://www.amazon.com/Investments-Irwin-Finance-Zvi-Bodie/dp/0256146381 which would be the much-abridged version of the CFA level 1 stuff.

If you're into day trading / charting, then I don't know much about that at all, some of the other answers may have some ideas. I've never been able to find info on this that didn't seem like it had a sketchy sales pitch kind of vibe. Honestly in a world of high-frequency trading computers I'm skeptical this is something to get into. Unless you want to program HFT computers: http://howtohft.wordpress.com/

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    Your "CFA" link is down....
    – Pacerier
    Commented Nov 27, 2013 at 0:28
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    Hft link is dead.
    – Jose Luis
    Commented Jul 16, 2015 at 8:50
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The Winning Investor
http://winninginvestor.quickanddirtytips.com/
This is a blog and a podcast. Load a bunch of these onto your iPod and start listening.

Stikky Stock Charts
http://www.amazon.com/Stikky-Stock-Charts-professionals-smart/dp/1932974008
This is a beginner's guide on how to read charts. Lots of charts, not too many words.

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    Chart reading as an introduction to investing? I would hope beginners would ignore charts and focus on the fundamentals instead.
    – Chris W. Rea
    Commented Apr 14, 2011 at 0:51
  • @Chris That seems like good advice.
    – YOMorales
    Commented Apr 14, 2011 at 2:52
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Los Angeles Times Investing 101

http://www.latimes.com/business/la-moneylib,0,3098409.htmlstory

Clark Howard's Investing Guide

http://www.clarkhoward.com/news/clark-howard/personal-finance-credit/clarks-investment-guide/nFZK/

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There is only one book worth reading in my opinion: One Up on Wall Street.

It's short and no other book even comes close to it for honesty, correctness and good sense. Also, it is written by the second most successful investor of all time, Peter Lynch.

The Intelligent Investor has some good technical content, but the book is dated and a lot of it is irrelevant to the modern investment environment. When I was younger I used to ready books like this and when a friend of mine asked for investment advice. I said "Look at stocks with a PE ratio of 5-10". A few days later he comes back to me and says "There are none". Right. That pretty much sums up the problem with the I.I. Graham himself in interviews during the 1970s said that his book was obsolete and he no longer recommended those methods.

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  • A good summary before reading the book. My only issue with Lynch is his advice that one could safely withdraw 8%/yr in retirement. Other than this one snippet, the rest of this book is at the top of my list as well.
    – JTP - Apologise to Monica ♦
    Commented Aug 10, 2016 at 5:27

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