Investing For Average Joes #3

There are many books you can read to determine how to invest in the stock market. So many, in fact, that choosing one might be daunting. "Investing For Dummies", if it exists, would be a good one given that those "dummies" books are well written and easy to understand. I just jumped into the market without any particular plan, which turned out to be expensive. But the hard way is the sure way.

The first thing you need to determine is what kind of investor you are; conservative, moderate, or aggressive. Knowing what you are will make your investing so much easier. Personally, I am aggressive because I want to see some results before I get old but whatever you are is perfectly ok.

Conservative investors want their investments to be as safe as possible with the least risk involved. They like their money and they want to keep it. Conservatives like bonds for their low risk and pre-determined yield. Conservatives are happy with low yields as long as they know their money will be there no matter what happens.

Aggressive investors realize that money is fluid and can be made or lost easily. They are willing to accept high risk for high gain. Sometimes that involves losing but there are ways to limit losses so thet they don't get out of hand. Aggressive investors like stocks, commodities, options, and the like. They are jumpers and are ready to get in or out at a moment's notice.

Moderate investors like a little of both. They are mutual fund and EFT traders. They buy stocks for long term commitments and will accept some risk if the deal looks promising. Moderates will hold some bonds for stability and spread out their portfolios. Moderate is a good place to start because you can quickly find out where you stand.

One good way to begin learning is to paper trade. In other words, pick some stocks from companies that you like and write down their prices. Then choose a number of shares as you would if you were actually buying them. Keep track of the market prices for a month and see how you would have fared had you bought the stock.

When you think you are ready to start investing for real, if you will email me your name and email address, I will send an invitation to Sharebuilder, which will give you $25 when you open an account. I get a few free automatic investments which I rarely use but your free $25 makes it worth it to me. You can also click on the Sharebuilder ad on this site but I don't know if they give the $25 that way or not.

Either way, Sharebuilder is the easiest, cheapest way to invest online. They have so many helpful tools to assist you from research to taxes and it's easy to understand. They won't allow you to invest in penny stocks but I am going to talk about penny stocks in another post. At the very least, click on Sharebuilder and check 'em out. I know you will like what you see.