Financial education is invaluable whether you manage your own finances or have outside help
Identify your goals and investment style and then decide which path to follow
Choose from a number of educational tools to help you achieve your long- and short-term financial goals
Learning to trade or invest in stocks can be invaluable, essential, and useful. Although navigating financial concepts can seem daunting, it can be an exciting journey. And in the end, it could be financially rewarding as you become a more knowledgeable and confident investor.
Fortunately, there are plenty of tools you can use to learn about investing and trading stocks. But first, let’s take a step back and look at the whole picture to chart out a learning path. The key is to keep your goals simple, learn small chunks of information at a time, and practice consistently and at an even pace. In time, what you learn will start to fall into place; ideas will begin to connect; and what was once complex could transition into a logical arrangement of practical tools and strategies.
To begin your journey, start with these three simple steps.
1. Set Financial Goals
Think about your investment goals. Do you want growth, income, or preservation?
- Investing for growth. Your focus may be on capital appreciation and higher returns. This approach may involve more risk and include a wider range of asset classes from which to choose—stocks, exchange-traded funds (ETFs), mutual funds, options, and even futures.Investing for income. If this is your goal, your focus is likely to be on generating dividend- and yield-based returns to supplement your current income. If income investing is your style, it may be a good idea to learn about dividends. You should also familiarize yourself with the basics of fixed-income investing, which may involve bonds and other fixed-income securities. Preserving your capital. Some investors with sizable portfolios consider a capital preservation strategy, which seeks to maintain wealth by forgoing the potential for higher returns generated by riskier assets in exchange for slower growth from low-risk assets.
Once you’ve decided on your investment goal, figuring out your investment style might come easier. Investing styles are typically broken down into two general categories: active and passive.
- A passive investor is someone who buys and holds stocks for the long term. If you fall into this category, consider learning about fundamental analysis.An active investor or trader buys and sells stocks with higher frequency and on a short-term basis. If you favor this approach, you might benefit from learning technical analysis, which focuses on analyzing charts. Another avenue to explore might be to learn about options trading. Options strategies can be designed for any type of market movement—up, down, or sideways—but they can be risky and may not be suitable for everyone. Learning the ABCs of options can help you decide if they may be right for you.
2. Identify Resources to Help Pursue Financial Goals
Once you’ve set your financial goals, the next step is to identify the educational resources that can help you learn the concepts and techniques.
Whether you’re a stock market beginner or a seasoned veteran looking for advanced investor education, TD Ameritrade offers clients an array of education resources. These can be accessed from tdameritrade.com, the thinkorswim® trading platform, mobile apps, YouTube … there’s even a TD Ameritrade chatbot on Facebook Messenger and a chatbot on Twitter. All these resources are designed to accommodate your schedule and pace.
To help make sense of it all, start off by selecting your education path from the Education Overview that can be found under the Education tab on tdameritrade.com (see figure 1). Because you’ve already identified your financial goals and investment style, choosing the education path you want to pursue should be easier. Do you want to learn the basics of investing, build a nest egg for retirement, trade stocks or options, speculate, or hedge your portfolio?
FIGURE 1: EDUCATION PATH. From the Education tab, you can access all educational tools: courses, in-person events, webcasts, and more. Image source: tdameritrade.com. For illustrative purposes only.
Say you want to learn to trade stocks or options. After making your selection, you can choose the type of trading that appeals to you. Maybe you want to find undervalued stocks to buy and hold. Perhaps you want to learn how to analyze charts or income-generating investments. Or maybe you’re ready to start trading options. Once you choose what you want to learn, you’ll see a summary of that particular learning path. If it’s the right path, you can begin your journey. Otherwise, choose a different path.
The education path includes an array of courses ranging from short videos that last a few minutes to courses that take hours or days to complete. It all depends on how much learning you can handle at a time.
When you select a course, you’ll get a snapshot of its length, the trading style it’s suitable for, and the experience level required. After each lesson, take the quiz at the end to see how much you learned. If you’re satisfied with your results, you can move on to the next lesson. Your progress is tracked and visible on the dashboard (see figure 2). If you’re not satisfied, you can repeat lessons.
FIGURE 2: PROGRESS REPORT. This handy dashboard helps keep track of your education progress so you can stay on course. Image source: tdameritrade.com. For illustrative purposes only.
Besides online courses, you can look through upcoming in-person events. Maybe there’s one scheduled in your area that you may want to attend. It’s a great way to meet likeminded investors.
If webcasts are your thing, TD Ameritrade offers weekly webcasts, which cover a myriad of topics from how to trade stocks, to options strategies, to portfolio construction and management.
You can also tune in to the TD Ameritrade Network for real-time market insights and strategy tips. This programming is hosted by industry professionals who interpret market events as they unfold and provide you with real-time information to apply to your strategies.
Once you’ve seen all your choices, you can chart out your personalized course of action. There’s no better way to get acquainted with these tools than to dive in.
3. Learn, Practice, and Do
There’s no one right way to learn to trade or invest in stocks. Give some thought to how you prefer to learn. Are you the type of person who prefers to learn by listening? Do you learn better using tactile tools—something you can touch, feel, and interact with? Do you learn best in an immersion environment, or do you prefer to learn in small chunks, with frequent breaks to help you absorb what you’ve learned?
Once you feel like you’ve made some progress, consider testing your strategies and getting some practice using the paperMoney® trading simulator on the thinkorswim platform. There you can practice, test, and backtest your strategies in a risk-free environment.
So whether it’s the weekend, after the close, or when you have downtime during the trading day, sit back and enjoy your educational journey. You’ve got the tools you need, right at your fingertips. It’s up to you to make use of them as you embark upon your financial education journey to become an empowered trader.
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