Resources for Beginners to Learn How the Stock Market Works
A collection of resources to help prospective investors learn how the stock market works, define an investment strategy, and start growing their money
The overall tendency of the stock market is to grow over time. While more than half of US households own stocks, there is also a significant proportion of the population that does not.
Two important reasons for this are the fear of losing hard-earned money, and having a limited knowledge of how the stock market works, which could be intimidating for beginners without proper guidance.
This article includes key resources for beginners to understand how the stock market works and the different investment alternatives available, so that readers can make informed decisions to manage their investments and improve their chances of growing their money in the stock market.
One of the main ways for beginning investors to learn about the stock market is via books. While there are many books on the topic, we put together a list of stock market books for beginners.
The following compilation of specialized websites, videos, and other resources can also help prospective investors get off to a good start with a more solid understanding of the stock market.
Investopedia has extensive content related to the stock market, including news, information, and educational materials. It also has a stock market simulator that allows users to record pretend purchases and monitor how they perform over time. It also operates Investopedia Academy, which offers an array of online courses on popular topics on the stock market for beginners.
Yahoo! Finance primarily operates as a stock-related news portal. In this regard, users can obtain a huge amount of information about what is occurring in the stock market today. Users can also examine its “My Portfolio” section, which allows them to create stock portfolios or watch lists.
This website has many articles on financial investing, including a guide on investing for beginners, which includes general information on the stock market, fundamental finance concepts, ways of investing, the difference between investment vehicles such as stocks and bonds, recommendations to develop an investment strategy, and steps to come up with an actionable investment plan.
Bankrate is a popular financial website that provides a huge breadth of personal finance information. This includes information on financial markets, investing, mortgages, loans, and more. It also has a section that serves as a good explainer of the stock market, including what it is, how it works, and what the rewards and risks of stock market investing are, as well as giving a variety of tips for beginners.
This is a personal finance blog with extensive information on investments, including many products offered by banks. This website also has specific guides on how to invest in the stock market for beginners, even for people who only have a small amount of money to start investing.
TED Ed is a great educational resource for a variety of items, and this four-and-a-half-minute video is no exception. It quickly goes over the basics of what the stock market is, how it originated and grew, how it currently works, and how people can invest in it to make more money, not just those with significant financial resources but also regular people who can become small investors.
This video explains the main concepts surrounding investing in the stock market, providing a broad overview that new investors may find helpful. It also addresses the main approaches to investing, stock brokers and types of investment accounts, among many other relevant topics.
Warren Buffet is one of the most successful investors in the world. In this video, he discusses seven factors that have guided his investment approach over the years, focusing on finding companies with great long-term prospects that can be bought at fair prices, in sectors that investors understand, guided by facts associated with the financial prospects of a company rather than by emotions.
This video explains how the stock market works, going over a variety of stock market basics and answering ten of the most popular questions from beginners about stocks, including what stock shares are, how to buy stocks, what you should look at when buying stocks, stocks vs. index funds, how to make money with stocks, best-case and worst-case scenarios, and taxes, among other related topics.
Stock screeners allow users to filter stocks based on select criteria defined by the users, including performance metrics, market capitalizations, dividend yields, sector and industry, country, analyst recommendations, earnings per share, candlestick shapes, etc. Some popular stock screeners are FinViz, Macrotrends, StockRover, TradingView, and the ones provided by most online brokers.
Stock brokerage companies like E*Trade and TD Ameritrade have significant educational resources for beginners. These include articles explaining the basic investing terms, charts, analyst reports and recommendations from specialized sources like SmartConsensus and Credit Suisse, and stock market news, among many others. By signing up for a free account, prospective investors can access the resources offered by their online platforms, and eventually begin to buy and sell stocks on their own.
Stock Advisory Services
There are different approaches to stock picking, and some require comprehensive analyses. To facilitate this process, there are specialized firms that analyze stocks and share their findings and stock pick recommendations with their clients, as part of their paid memberships. Some of these services are The Motley Fool, Investor’s Business Daily, MapSignals, All Star Charts, Wanderer Financial, and Seeking Alpha, the last of which has free crowd-sourced content and a paid membership.
People can also benefit from the personalized expert advice provided by licensed financial advisors, who assist their clients to develop their investment strategy, determine their optimal asset allocations, find stocks that fit their investment plans, and identify potential pitfalls throughout the process. It is important to understand that while some advisors receive commissions from the sale of the products they sell to their clients, like mutual funds, others are fee-only registered investment advisors (RIA), which have the fiduciary responsibility to act in the best interest of their clients. Many stock brokers have financial specialists that can advise their clients on different investment matters.
There are many whitepapers that can provide useful information for investors. These are available from different online sources. Some examples include Jim Cramer’s 25 Rules for Investing, published by The Street; and The Market Answer Key: Big Money, by Bodner and Downey from MapSignals.
Financial magazines include articles that help investors stay informed about market trends and discover the possibilities of new investment niches. They also cover stories of emerging companies and their potential long-term growth. Key financial magazines for beginners include Forbes, Kiplinger’s, Fortune, and Money. As investors become more experienced, need more detailed data, and are able to understand stock trading terminology, they may also consider other publications like Barron’s and Bloomberg Businessweek.
There are many other resources and programs for people to learn about the stock market, which new investors can use to enhance their knowledge of how to make money trading financial securities.
While there is no best way to learn about investing in the stock market, since every person has a different learning style, the resources above can serve as good starting points to begin your learning journey, and in the process discover even more resources to reinforce your learning.
In most cases, individual resources such as books, videos, articles, and other resources are not going to be enough by themselves, but when used in combination they can enhance investors’ knowledge through the presentation of different perspectives and strategies, and thus assist them in developing an investment approach that reflects their personal preferences and risk tolerance.
Disclaimer: The contents of this article are provided for educational purposes only and are not intended to be investment, tax, or legal advice. The inclusion of the resources referenced in this article does not imply an endorsement of their ideas, recommendations, or content.Any action taken upon the information on this article or the one in the resources listed here is strictly at your own risk. Readers interested in obtaining investment advice should consult a duly licensed investment advisor.