A new investor should first visit the local library and try to get various guides on personal finance. Issues relating to personal finance includes basis for a budget, sticking to the budget, saving money for an easy retirement life, major purchases, and managing the accrued finances properly.
New investors should go through newspapers such as Wall Street Journal, which will familiarize the reader with insurance, stocks, investments etc. through their Friday Column aptly named "Getting Going" by Jonathan Clement.
A new investor should not barge into the stock market based on any half-baked advice by close relatives or friends. For getting a proper idea about overall money management, study books such as The Intelligent Investor. For the sake of reference, this title is highlighted. If you browse in the bookstores or libraries, several other equally good guides might be available.
If excess cash is available immediately and if you are still going through the learning process, without wasting time, you can put the excess money in a mutual fund or even the bank.
Even though this learning process appears to be a daunting chore, it is better than relying on professional money market advisors who will charge a hefty amount for guiding you in making money. Ultimately, you and you alone are responsible for your financial situation - win win or no win.
Once a new investor gets a fair idea about personal finance management, further studies in mutual funds, stocks and bonds will be the next logical step.
A mutual fund is money pooled by a group of investors, which is used to buy stocks or bonds from various companies and strives to achieve a specified target of growth. Many mutual funds set 1000 dollars as the minimum initial investment money. A closed ended mutual fund is similar to a share issued by a company trading in the stock exchanges. It can be traded through a broker just like any other stocks. Open-ended mutual funds assure a fixed annual
income without any surprises.
Some of the popular mutual funds are money-market funds, balanced funds, index funds, pure bond funds, pure stock funds and tax-free bond funds.
The next logical step or the parallel step is investments in stocks.A certain amount of guesswork is needed for buying and selling them. To get some knowledge about the risks involved, try to play the investment games online, which simulates the practice of selling and buying stocks without losing money or facing any risk. After thorough familiarisation, a first trade in stock with
