What is the best way to earn money in stock market?

[nameeta26]

I really want to expand my knowledge to trade successfully. Please help.

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[Tigerhawk77]

You can’t beat the stock market as a lay investor. You can make returns investing in mutual funds. If you have any debt, paying that off is a far better strategy. I worked at one of the big bad IBanks before med school. I promise you that day trading or individual stock purchases is a fool’s errand.

 

[mvenus929]

1. Put money in low-cost index fund
2. Wait many years
3. Profit

 

[post-bacc]

I really want to expand my knowledge to trade successfully. Please help.

Nameeta, do you want to "trade" successfully or "invest" successfully. The distinction is that trading requires very short term thinking (from a few seconds to a few days) about investment vehicles and investing requires long term thinking (years) about investing vehicles. Full disclosure: I am not a financial planner, just someone with a finance degree who enjoys reading about investments.

Trading has become very dominated by machines and algorithms, though you can still profit from it if you are advanced. If you are interested in investing, consider reading Benjamin Graham's The Intelligent Investor. This is the book that Warren Buffett credits with helping to influence his investment philosophy. To quickly distill this, you should look into putting the majority of your investments into a low cost index fund that tracks the broad markets. Vanguard is typically considered one of the lowest fee funds, and a ticker symbol of VFINX is a great place to start.

I hope this helps!

 

[nameeta26]

Thank you for the reply everyone. I wanted to trade but after listening to you guys I think investment would be more suitable. Please tell me more about it.

 

[TMP-SMX]

Read

 

[Retire Early MD]

I really want to expand my knowledge to trade successfully. Please help.

Recommend google search bogelheads forum. Go to start here on the left hand side. That's where I started learning about investing.

Step 1) If you are young in your 20s with very little investing knowledge, you cannot go wrong by putting all your money in VANGUARD TOTAL STOCK MARKET INDEX FUND and stay the course.

Step 2) Spend the next decade or so reading up on investing and planning for retirement. Then you will be ready to rebalance, tax loss harvest, and add some bells and whistle to your portfolio etc...

 

[redfish955]

Recommend google search bogelheads forum. Go to start here on the left hand side. That's where I started learning about investing.

Step 1) If you are young in your 20s with very little investing knowledge, you cannot go wrong by putting all your money in VANGUARD TOTAL STOCK MARKET INDEX FUND and stay the course.

Step 2) Spend the next decade or so reading up on investing and planning for retirement. Then you will be ready to rebalance, tax loss harvest, and add some bells and whistle to your portfolio etc...

The 28/36 rule is a good starting point for anyone. I would aim to save 25 percent of my gross income annually if starting young for retirement. Once your first purchases are paid off put the money in etf and pay cash for everything going forward.

 

[nameeta26]

Thank you for your replies. They are really helpful. But is investment in stock market is better than a mutual funds?

 

[Mman]

Thank you for your replies. They are really helpful. But is investment in stock market is better than a mutual funds?

Mutual funds are funds that put your money into other investments. They might track the S&P 500 or some bond index or some combination thereof or particular sectors of stock markets like tech or health care or whatever.

I think you just need to read some basic investing books that tell you what a stock is, what the stock market is, what bonds are, what mutual funds are, what ETFs are, etc. since you gotta cover those basics before worrying about bigger topics.

 

[nameeta26]

Yes, I have covered at least most of the charts and learned them. I would love to know more.

 

[TexasPhysician]

I put as much into retirement accounts as possible each year. The money goes into low cost mutual funds.

I also invest in some individual stocks after thorough individual research in non-retirement accounts. I enjoy it. I generally can beat the market yearly by a fair amount, but I recognize that this is much higher risk and 1 bad choice can ruin it all. I’m ok with the risk.

My biggest play right now is EGY (Vaalco). It is an oil company in the Brent market with no debt and quarterly cash flow trading at a below average P/E. I usually buy healthcare related stocks, but this has good fundamentals. Only time can say whether this will work out.

 

[Retire Early MD]

I put as much into retirement accounts as possible each year. The money goes into low cost mutual funds.

I also invest in some individual stocks after thorough individual research in non-retirement accounts. I enjoy it. I generally can beat the market yearly by a fair amount, but I recognize that this is much higher risk and 1 bad choice can ruin it all. I’m ok with the risk.

My biggest play right now is EGY (Vaalco). It is an oil company in the Brent market with no debt and quarterly cash flow trading at a below average P/E. I usually buy healthcare related stocks, but this has good fundamentals. Only time can say whether this will work out.

Just wanted to add that I cannot stress enough the quality of mutual fund/ ETF/ company.

Default should always be Vanguard, some may disagree with me.

Index investing is boring but effective.

 

[Raryn]

Just wanted to add that I cannot stress enough the quality of mutual fund/ ETF/ company.

Default should always be Vanguard, some may disagree with me.

Index investing is boring but effective.

Vanguard is good, but has few advantages over Fidelity or Schwab. The main one I can think of is the ownership structure (the funds own vanguard, there's no profit motive). OTOH, Fidelity at this point has the lowest expense ratios of any of them and has much better customer service in general.

Regardless though, any of the large low-cost brokerages works just fine. I have accounts with all three of the above and have been happy with them all.

 

[nameeta26]

Thank you for a very helpful replies. I agree that Index investing is boring but effective.

 

[deleted126335]

O'Shaughnessy: "Fidelity had done a study as to which accounts had done the best at Fidelity. And what they found was..."

Ritholtz: "They were dead."


Why the dead outperform the living

 

[nameeta26]

Thank you for the reply. This is a very good humorous reply. I will surely check it out full.

 

[humblethinker]

any good resources/advice for weighing long-term investing on index funds vs. investing the same amount into the real estate market?

 

[Mman]

any good resources/advice for weighing long-term investing on index funds vs. investing the same amount into the real estate market?

equity returns would be expected to trounce real estate returns over any long enough time frame

 

[nimbus]

O'Shaughnessy: "Fidelity had done a study as to which accounts had done the best at Fidelity. And what they found was..."

Ritholtz: "They were dead."


Why the dead outperform the living

This is interesting. I have a family member who has a trust fund that was esssentially neglected for a decade. The trustees neglected their duties and never rebalanced or even looked at the holdings of the fund and lo and behold it did incredibly well and outperformed the markets.