Investing 101 — From the Perspective of a Young Man

The basics that everyone needs

Photo by Austin Distel on Unsplash

This is a guide for beginners, from beginners to investing in the stock market.

Having no business and finance background — I am a Computer Science student — it is quite tricky to start investing. I had no mentors or guides actually to have structured learning of investing in the stock market. I jumped around too much from one resource to another, wasting my time — and money. I hope my experience can actually help you along the way.

For total beginners, the best way to start learning about investing is NOT by reading The Intelligent Investor. The book is too heavy and complicated for beginners.

I would suggest beginners learn about the fundamentals of business and finance:

Accounting

In the stock market, we try to buy and sell the business. Hence, it is essential to understand how a business works.

What is net profit? What is EBITDA? What is equity? What is liability? What is sunk cost? What is opportunity cost? What is cash flow?

Those terms are essential for your future learning. Hence, before advancing, you should understand those terms. Resources are abundant on this topic, so it should be easy to get started.

Here are some of my recommendations for the resource:

Time Value of Money

Why do people invest? Why do we pay interest for the money we borrow? It is related to the time value of money. In short, it means that $1 today > $1 tomorrow.

You will understand what yield to maturity, expected return, and other related terms from this topic. This topic is essential in valuing a stock.

Here are some of my recommendations for the resource:

How the Stock Market Works

This topic is about how to buy/sell stocks. You need to know the playground before you play on it, no?

Here are some of my recommendations for the resource:

Stock Market 101 by Michele Cagan

Conclusion

Are you ready? After the completion of the aforementioned topics, you are ready! You are ready to learn about the stock market! The journey awaits my friend; I am sure as hell it is gonna be a good one.

A simple person who loves philosophy, good food, and dogs. I write articles on communication, self-help, and occasional coding stuff. A HUGE F.R.I.E.N.D.S fans.

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