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How to buy stocks for beginners is such a tricky question to answer because there is so much information out there. It's easy for a beginner to get completely swamped with information rendering it all meaningless. The other problem for newcomers to the stock market is with all the jargon that comes with playing the stock market. What does it all mean and how can you pick up the basics so that your brain has something to hook on to and make the more complex concepts easier to understand. You know the jargon I'm talking about. Bears and bull markets, price to earning ratio. I'm sure you've heard a whole host of terms already. If you've turned on your TV with stock advice being thrown at you, you could be forgiven for wondering if they are actually speaking English!
So how do we tackle this for newcomers to the stock market? First of all, have a look through the Internet on sites such as Motley Fool and especially Yahoo Finance. The information they provide is invaluable. The great thing here is not only do they provide advice for beginners to stocks and shares they also offer a little more expert knowledge for those of you who a few steps down the road to making serious money with stocks and shares. They also have wonderful forums where you can ask for advice or clarification on what a term means. I wouldn't take advice on buying stocks from one of these forums however make sure you do your own research before you dive in and buy stocks. This is something you absolutely must not do by the way. Don't just go straight ahead and buy yourself some stocks without doing effective research. Yes you could be lucky and strike it rich but there's more chance you won't and could lose your investment. This will only leave you feeling more downhearted and reluctant to take any further risks with your money.
I've always recommended using Warren Buffett's techniques of value investing to buy stocks and shares and this is what I recommend for beginners to the stock market too. The concept is that you basically look for stocks which are undervalued by the market and so you get them for a bargain price. Think of buying stocks as becoming a partner in a business and that way you're less likely to act irrationally if you see your stocks have dropped a few points. People tend to go crazy when they see this and dump their stocks which is completely overreacting. Once you are a bit more comfortable with the terms used I'd recommend reading Security Analysis by Ben Graham who was Warren Buffetts teacher and mentor. It's as close as we have to a stocks Bible and an absolute must read for anyone out there. It can be a bit heavy going and that's why I don't advice you to just steam ahead and read it. Get comfortable with the terms first then pick this up. You could also have a go at many of the fantasy stock market games there is online now too which is a great way for you to dip your toe in the water and see if investing is for you.
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